On January 1,Teague Company Leased Office Equipment from Sprague Corporation

True/False

On January 1,Teague Company leased office equipment from Sprague Corporation.The lease qualifies as an operating lease.The term is three years and calls for semiannual payments of $25,000 each,payable on June 30 and December 31 of each year.Sprague acquired the machines at a cost of $150,000 on January 1 of the current year.The expected life is five years with no residual value expected.
Required:
1.Prepare the appropriate journal entries for the lessee for the first year.
2.Show how the lessor would disclose this lease on the face of the balance sheet for December 31 of the current year.