Shamrock Corporation recorded a right-of-use asset for $187,600 as a result of a finance lease on December 31, 2019. Shamrock’s incremental borrowing rate is 12%, and the implicit rate of the lessor was not known at the commencement of the lease. Shamrock made the first lease payment of $36,702 on on December 31, 2019. The lease requires 7 annual payments. The equipment has a useful life of 7 years with no residual value.Prepare Shamrock's December 31, 2020, entries.

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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.