Diablo Company leased a machine from Juniper Corporation on January 1, 2016. The machine has a fair value of $11,000,000. The lease agreement calls for four equal payments at the end of each year. The useful life of the machine was expected to be four years with no residual value. The appropriate interest rate for this lease is 12%.
Other information:
PV of an ordinary annuity @12% for 4 periods: 3.0374
PV of an annuity due @12% for 4 periods: 3.4018
Required:
Determine the amount of each lease payment and Record appropriate journal entries