Kingston 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 equipments 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 Kingstons journal entries on January 1, 2017, and December 31, 2017. Assume the annual lease payment is $35,000 at the beginning of each year, and Kingstons incremental borrowing rate is 6%, which is the same as the lessors implicit rate.

?I have three sets of entries to record. the first in on 01.01.17 to record the lease liability, then another on 01.01.17 to record the lease payment and the last one on 12.31.17 that has three entries in one. so two debits and one credit.