1. A company entered into a lease on 1/1/16, that does not transfer ownership or contain a bargain-purchase option. Management assembled the following data:

Lease term	3 years, commencing 1/1/16
Useful life of the equipment	8 years
Present value of the minimum lease payment is less than 90% of the fair value of the asset leased.
Required payments	$35,000 at the beginning of each year

Using the attached T-account template, prepare the entry to recognize the lease payment on 1/1/16.