Presented below are three different lease transactions that occurred for Ruggiero Inc. in 2020. Assume that all lease contracts start on January 1, 2020. In no case does Ruggiero receive title to the properties leased during or at the end of the lease term.

Instructions
a. How should the lease transaction with Hester Co. be recorded in 2020?
b. How should the lease transaction with Judson Delivery be recorded in 2021?

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Lessor Hester Co. Delivery equipment $ 4,200 4 years Judson Delivery Computer Type of property Yearly rental Lease term Estimated economic life Present value of the lease rental payments $ 5,000 6 years 7 years 7 years $13,000 $26,000