I actually have a similar situation. I'm new to equipment finance agreements and accounting in general. I did something similar with my initial journal entry, however, I set up the liability account slightly different. I accounted for the full amount of the contract owed(asset cost + fixed interest due) with liability account credit. I then debit asset for cost of equipment. I also then debit interest expense for interest owed to balance asset/liability even though the interest has not yet been paid to balance the journal entry. My thought was I need to represent full amount of liability. Reviewing may work, I have been searching to determine I may have done this incorrectly. Should I follow the stated method and only credit liability account for cost of asset, and account of interest as its paid with each payment? Not sure if it is exact situation but sounds similar to original question posed here.