Calder Manufacturing recognised a lease on 1 January 2025 with a lease liability and right-of-use asset of $165,600.
- The lease term is four years, with payments of $50,000 annually in arrears.
- The interest rate used to discount the lease is 8%.
- The right-of-use asset is depreciated on a straight-line basis over the lease term, with no residual value. Ownership does not transfer.
Required: Prepare the journal entries at 31 December 2025 for (a) interest on the lease liability, (b) the lease payment, and (c) depreciation of the right-of-use asset.
Interest accrues on the carrying amount of the liability. Depreciation is calculated on the asset and is entirely separate from the payment.