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2- Pass a journal entries in the books of lease contract by creating lease receivable at its net investment in which is equal to the minimum lease payments discounted at the rate of interest implicit in the lease.
3- Pass a journal entries in the in recognition of both an asset and a liability in the books of the lessee at the inception of the lease at amount equal to present value of minimum lease payments.
4- Journalize the transactions in the books of lessor and lessee if the lease meets the criteria for recognition as an operating lease instead of a finance lease.
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