On the asset side the total amount of $60,000 would be recognized as an asset in two parts: equipment cost and pre-paid interest. The simple part is that the equipment would be added to the total equipment of the business, where it would be depreciated normally. The prepaid interest would be recorded in two parts—current and non-current—and reduced each month. It would be recognized as interest expense, as payments were made in conjunction with the liability being reduced.
It sounds more complicated than it is. In practice, one general journal entry would be created and duplicated each month for the life of the lease. What is important is that the lease would then reflect the current liability (current or next 12-month demand on cash).
The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB), the US governing body for accounting stuff, have issued an exposure draft to create a converged approach to lease accounting that would eradicate the old distinction between operating and capital leases.
A revision of the 2010 proposed FASB Accounting Standards Update on Leases (Topic 840) Proposed Accounting Standards Update—Leases (Topic 842): a revision of the 2010 proposed FASB Accounting Standards Update, Leases (Topic 840)
More recent information on the topic:
• IASB and FASB propose changes to lease accounting
• New Accounting Proposal on Leasing Portends Big Changes: NY Times
• Changes to Lease Accounting Standards Could Affect Construction Industry
• IASB publishes highly anticipated lease accounting proposals