The following information is available for a noncancelable lease of equipment that is classified as a...
The following information is available for a noncancelable lease of equipment that is classified as a sales-type lease by the lessor and as a capital lease by the lessee. Assume that the lease payments are made 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.
| Cost of equipment to lessor (Anson Company) | $50,000 |
| Initial payment by lessee (Bullard Company) at inception of lease | 2,000 |
| Present value of remaining 35 payments of $2,000 each discounted at 1% per month | 58,817 |
Required: ( can you please provide a detail solution)
| 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. | 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. |
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The following information is available for a noncancelable lease
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