On December 31, 2014, a day when the available interest rate was 10%, Valcent Products Inc. leased equipment with an eight-year life. The contract called for a $7,200 annual lease payment at the end of each of the next five years, with the equipment becoming the property of the lessee at the end of that period. Prepare entries to record (a) the leasing of the equipment, (b) depreciation expense for 2015 assuming straight-line and a zero residual value, (c) the December 31, 2015, lease payment, including the recognition of interest expense on the lease liability on December 31, 2015, and (d) prepare an amortization schedule for the lease liability.
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