P15-4A

Bfne sheet at P15-SA Presented below are three different lease transactions that occurred for Riggiero in 2017. Assume that all lease contracts start on January 1,2017. In no case does Ragu iero receive title to the properties leased during or at the end of the lease term Lessor Judson Delivery Computer s 5,000 6 years years $27,500 Hester Co. Gunselman Auto Type of property Yearly rental Lease term Estimated economic life Fair value of lease asset Present value of the lease Delivery equipment Automobile S 4,200 4 years 7 years $19,000 5 3,700 2 years 5 years $11,000 rental payments Bargain purchase option $26,000 None $13,000 None S 6,400 None Instructions a) Which of the leases are operating leases and which are capital leases? Explain. (b) How should the lease transaction for Hester Co. be recorded in 2017 (c) How should the lease transaction for Judson Delivery be recorded on January 1, 2017