Company A leased a machine from B_Corp. B_Corp completed construction of the machine on January 1, 2011. The lease agreement for the $5 million (fair value and present value of the lease payments) machine specified 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. B_Corp's implicit interest rate was 11% (also Company A's incremental borrowing rate.
Q. Prepare an amortization schedule for the four-year term of the lease.
What is the journal entry for the first lease payment on December 31, 2011? and for the third lease payment on December 31, 2013?