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How do you do the double entry on an Onerous lease?

In: Financial Statements, How-To [Edit categories]

Answer:

At the date the lease becomes onerous:

Dr P&L Expense - onerous lease.

Cr Balance Sheet Provision for onerous lease.

Each time there is a rental payment on the lease:

Dr Balance Sheet Provision for onerous lease.

Cr Cash

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Contra entry
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Debit Bad Debt Expense. Credit Allowance For Doubtful Accounts (a contra-asset account on the Balance Sheet).
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