EFG signed a 10-year operating lease agreement whereby ABC rentals will provide a machine which costs ABC $60,000. The lease payments are $5000 payable at the end of each year. The machine will revert to ABC at the end of ten years. The machine has a useful life of 20 years. At the inception of the lease EFG should:

• record rental expense of $5,000.
• record rental expense of $10,000.
• make no journal entry.
• record the lease asset and a corresponding liability at its current market value.