The present value of the lease asset and liability are the same, so as the cash is paid to rent expense, there needs to be the lease asset reduction. This nets with the lease liability reduction (because it is operating and not based on interest). Shouldnt expense be grossed up by the reduction of the lease asset?
Since the $40,000 was earned within the fist year, but not "paid out". Shouldn't the there be an expense for the $40,000 incurred but not paid. Therefore the $800,000 would be an increase in restricted net assets and the $40,000 would be a decrease in unrestricted net assets. There would also be a liability set up for the $40,000 expense. Then that liability would be debited when the $40,000 is actually paid out. Please correct me if i'm wrong.