At the commencement of a finance lease agreement the lessor recognises the balance of the lease receivable as the:

		the present value of the residual value of the asset.
		the present value of the lease payments receivable from the lessee.
		the present value of the lease payments receivable from the lessee and the present value of the unguaranteed residual value.
		the nominal value of the lease payments receivable from the lessee.

Which of the following is an appropriate journal entry for the recognition by a lessor of the first payment received (at the end of the first year) under an operating lease arrangement?

		DR Cash: CR Lease income
		DR Lease expense: CR Deferred initial direct costs
		DR Leased liability: CR Lease income
		DR Lease expense: CR Cash