McCormick Corporation Ltd., a public company following IFRS, recorded a finance lease at $150,000 on May 1, 2011. The interest rate is 10%. McCormick Corporation made the first lease payment of $25,561 on May 1, 2011.
The lease requires a total of eight annual payments. The equipment has a useful life of eight years with no residual value.
Prepare McCormick Corporation’s December 31, 2011 adjusting entries.