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Kingston Corporation leases equipment from Falls Company on January 1 , 2 0 2 5 . The lease agreement does not transfer ownership, contain a

Kingston Corporation leases equipment from Falls Company on January 1,2025. 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 payment is less than 90% of the fair value of the asset leased. 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.
Prepare all the necessary journal entries for Falls Company (the lessor) for 2025, assuming the equipment is carried at a cost of $200,000.

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