What journal entry does a lessor record when recognizing a lease contract that transfers ownership?

When a lessor recognizes a lease contract that transfers ownership of the underlying asset to the lessee, the correct journal entry reflects the nature of the lease as a sale-type lease. In this scenario, the lessor will record a lease receivable, which represents the right to receive future lease payments from the lessee, and this is correspondingly recognized as lease revenue.

The debit to Lease Receivable signifies that the lessor has the right to receive payments, while the credit to Lease Revenue indicates that the lessor has recognized income from the lease agreement. This treatment aligns with the recognition criteria outlined in accounting standards, whereby transferring ownership suggests that the lease effectively constitutes a sale rather than merely a rental or operating lease.

In contrast, the other choices do not correctly represent the accounting treatment for a lease that involves the transfer of ownership. For instance, debiting a capital asset and crediting a lease liability would more appropriately apply to different types of transactions or lease arrangements where the asset remains on the lessor's books. The entry concerning the right of use asset and deferred inflow does not relate to ownership transfer and is pertinent to operating leases or other specific arrangements, while debiting expenditure and crediting vouchers payable is unrelated to lease accounting principles.