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Jordan Adelson, a senior manager at PwC's national office, discusses how lessees record lease liability and right of use asset for operating and finance leases. Day 1 accounting is the initial recording at lease commencement, while day 2 accounting is after initial recording. An example is a 5-year lease with annual payments of $1.1 million, with the first payment due at commencement. A $100,000 lease incentive is provided by the lessor. Check out the finance lease video for day 2 accounting.