Reference no: EM132892010

Problem - 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 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 -

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.