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Prepare the journal entry for Diablo Company

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Question - Diablo Company leased a machine from Juniper Corporation on January 1, 2021. The machine has a fair value of $10,000,000. The lease agreement calls for five equal payments at the end of each year in the amount of $2,774,097. The useful life of the machine was expected to be five years with no residual value. The appropriate interest rate for this lease is 12%.

Required -

1. Prepare the journal entry for Diablo Company at the beginning of the lease.

2. Prepare the journal entry for the first lease payment (ignore amortization).

3. Prepare the journal entry for the second lease payment (ignore amortization).

Reference no: EM132536978

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