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On January 1, 2020, Oriole Corp., which uses IFRS, signs a 10-year, non-cancellable lease agreement to lease a specialty lathe from Liu Inc. The following information concerns the lease agreement.

1.		The agreement requires equal rental payments of $89,432 beginning on January 1, 2020.
2.		The lathes fair value on January 1, 2020, is $610,000.
3.		The lathe has an estimated economic life of 12 years, with an unguaranteed residual value of $16,000. Oriole Corp. depreciates similar equipment using the straight-line method.
4.		The lease is non-renewable. At the termination of the lease, the lathe reverts to the lessor.
5.		Orioles incremental borrowing rate is 9% per year. The lessors implicit rate is not known by Oriole Corp.
6.		The yearly rental payment includes $2,229.93 of executory costs related to insurance on the lathe.

Assume that Orioles fiscal year end is May 31. Prepare the journal entries on Oriole Corp.s books to reflect the signing of the lease agreement and to record payments and expenses related to this lease for the calendar years 2020 and 2021. Oriole does not prepare reversing entries.

1/1/20	enter an account title to record lease payment	enter a debit amount	enter a credit amount
	enter an account title to record lease payment	enter a debit amount	enter a credit amount
	enter an account title to record lease payment	enter a debit amount	enter a credit amount
	enter an account title to record lease payment	enter a debit amount	enter a credit amount
	enter an account title to record lease payment	enter a debit amount	enter a credit amount
	(To record lease payment.)
5/31/20	enter an account title to record depreciation expense	enter a debit amount	enter a credit amount
	enter an account title to record depreciation expense	enter a debit amount	enter a credit amount
	(To record depreciation expense.)
5/31/20	enter an account title to record interest	enter a debit amount	enter a credit amount
	enter an account title to record interest	enter a debit amount	enter a credit amount
	(To record interest.)
12/31/20	enter an account title to record expired insurance	enter a debit amount	enter a credit amount
	enter an account title to record expired insurance	enter a debit amount	enter a credit amount
	(To record expired insurance.)
1/1/21	enter an account title to record lease payment	enter a debit amount	enter a credit amount
	enter an account title to record lease payment	enter a debit amount	enter a credit amount
	enter an account title to record lease payment	enter a debit amount	enter a credit amount
	enter an account title to record lease payment	enter a debit amount	enter a credit amount
	enter an account title to record lease payment	enter a debit amount	enter a credit amount
	(To record lease payment.)
5/31/21	enter an account title to record depreciation expense	enter a debit amount	enter a credit amount
	enter an account title to record depreciation expense	enter a debit amount	enter a credit amount
	(To record depreciation expense.)
5/31/21	enter an account title to record interest	enter a debit amount	enter a credit amount
	enter an account title to record interest	enter a debit amount	enter a credit amount
	(To record interest.)
12/31/21	enter an account title to record expired insurance	enter a debit amount	enter a credit amount
	enter an account title to record expired insurance	enter a debit amount	enter a credit amount
	(To record expired insurance.)

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