36. Things Corporation leased a machine on December 31, 2019, for a three-year period. The lease agreement calls for annual payments in the amount of $50,000 on December 31 of each year beginning on December 31, 2019. Things has the option to purchase the machine on December 31, 2022, for $10,000 when its fair value is expected to be $30,000. Exercise of the option is reasonably certain. The machine's estimated useful life is expected to be five years with no residual value. The appropriate interest rate for this lease is 7%.

1. Calculate the amount to be recorded as a right-of-use asset and the associated lease payable

Present value of annual lease payments	?
Plus: present value of the exercise price	?
Present value of the lease payments	?

2. Prepare an amortization schedule for this lease

Date	Lease payment	Effective interest	Decrease in balance	Outstanding balance
12/31/19
12/31/20
12/31/21
12/31/22

3. Prepare Rumsfeld's journal entries for this lease for 2019, 2020 and 2022

December 31, 2019

December 31, 2020:

December 31, 2022