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Pina Corporation leases equipment from Falls Company on January 1, 2017. The lease agreement does not...

Pina Corporation leases equipment from Falls Company on January 1, 2017. The lease agreement does not transfer ownership, contain a bargain purchase option, and is not a specialized asset. It covers 3 years of the equipment's 8-year useful life, and the present value of the lease payments is less than 90% of the fair value of the asset leased. Prepare Pina’s journal entries on January 1, 2017, and December 31, 2017. Assume the annual lease payment is $37,000 at the beginning of each year, and Kingston's incremental borrowing rate is 6%, which is the same as the lessor's implicit rate.

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