On January $1,2020,$ Sidelines Company purchases equipment with an estimated $5-$year useful life by making a $$6,500$ cash payment and issuing a noninterset$-$bearing note for $$30,000$ due in two years. The fair value of the the equipment is unknown. An $12\%$ annual interest rate is typical of this transaction. The present value factor of $$1$ for i$=12\%$ and n$=2$ is $0\mathrm{.}79719.$ The company uses the effective interest method to amortize interest expense and the straight$-$line method to estimate depreciation expense. The residual value of the equipment is zero. The equipment should be recorded at