Kingston plc leases equipment from Falls Ltd. on January 1, 2022. The lease agreement does not transfer ownership or contain a bargain purchase option, and it 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 Kingston’s journal entries on January 1, 2022, and December 31, 2022. Assume the annual lease payment is £35,000 at the beginning of each year, and Kingston’s incremental borrowing rate is 6%, which is the same as the lessor’s implicit rate.