Hughey Co. as lessee records a capital lease of machinery on January 1, 2018.  The seven annual lease payments of $875,000 are made at the end of each year.  The present value of the lease payments at 10% is $4,260,000.  Hughey uses the effective-interest method of amortization and Straight-line Depreciation over 7 years  (no residual value).  Instructions (Round to the nearest dollar.) (a)   Prepare an amortization table for 2018 and 2019. (b)   Prepare all of Hughey’s journal entries for 2018.

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Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.