Chapter 20, Problem 14E

Lessee and Lessor Accounting Issues The following information is available for a noncancelable lease of equipment entered into on March 1, 2019. The lease is classified as a sales-type lease by the lessor (Anson Company) and as a finance lease by the lessee (Bullard Company). Assume that the lease payments are nude at the beginning of each month, interest and straight-line depreciation are recognized at the end of each month, and the residual value of the leased asset is zero at the end of a 3-year life.

Required:

1. 1. Record the lease (including the initial receipt of $2,000) and the receipt of the second and third installments of $2,000 in Anson’s accounts. Carry computations to the nearest dollar.
2. 2. Record the lease (including the initial payment of $2,000), the payment of the second and third installments of $2,000, and monthly depreciation in Bullard’s accounts. The lessee records the lease obligation at net present value. Carry computations to the nearest dollar.