Determining Type of Lease and Subsequent Accounting On January 1, 2013, Ballieu Company leases specialty equipment with an economic life of 12 years to Anderson Company. The lease contains the following terms and provisions:

The lease is noncancelable and has a term of 12 years.

The annual rentals are $30,500, payable at the beginning of each year.

The interest rate implicit in the lease is 12%.

Anderson agrees to pay all executory costs and is given an option to buy the equipment for $1 at the end of the lease term.

The cost of the equipment to the lessor is $181,000, and the fair retail value is approximately $211,600.

The lessor incurs no material initial direct costs.

The collectibility of the rentals is reasonably assured, and there are no important uncertainties surrounding the amount of unreimbursable costs yet to be incurred by the lessor.

The lessor estimates that the fair value is expected to be significantly greater than $1 at the end of the lease term.

The lessor calculates that the present value on January 1, 2013 of 12 annual payments in advance of $30,500 discounted at 12% is $211,599.82 (the $1 purchase option is ignored as immaterial).

Prepare all journal entries

2013 Jan 1 Recorded Lease	Lease Recivable	366000	-
	Equipment	-	211599.82
	Unearned Interest: LEases	-	154400.18
Cost	Cost of Assets Leased	?	-
	Speciality Equipment (Inventory)	-	?
Payment	Cash	?	-
	Lease Recievable	-	?
Dec 31 Interest Revenue	Unearned Interest: Leases	?	-
	Interest Revenue: Leases	-	?
2014 Jan 1 Collect Payment	Cash	?	-
	Lease Recievable	-	?
Dec 31 Interest Revenue	Unearned interest: Lease	?	-
	Interest Revenue: LEase	-	?