PT Lessor leased an equipment to PT Lessee on January 1, 2014, when the fair value of the equipment was Rp 134,581,500. The useful life of the equipment is estimated to be 9 years. The agreement, which resulted in an initial direct cost of Rp 2,185,000, requires an annual rental payment of Rp. 25 million paid every year for 6 years. Lessee guarantees a residual value of Rp 10,000,000. Meanwhile the residual value at the end of the useful life of the equipment is estimated at Rp 5,000,000. The interest rates used by PT Lessor are known by PT Lessee. Leases are recognized as finance leases.

The journal made by the lessor at the beginning of the lease agreement is

136,766,500 134,581,500 2,185,000 136,766,500 134,581,500 2,185,000 A B A. dr. Finance Lease Receivables cr. Equipment cr. Cash B. dr. Finance Lease Receivables cr. Equipment cr. Financing Income C. dr. Finance Lease Receivables dr. Operating Expenses cr. Equipment cr. Cash 11 D. dr. Finance Lease Receivables Idr. Operating Expenses cr. Equipment cr. Financing Income 134,581,500 2,185,000 134,581,500 2,185,000 134,581,500 2,185,000 134,581,500 2,185,000