On January 1, 2017, Beard Company purchased a machine for $620,000. The machine is expected to have a 10-year life, no residual value, and will be depreciated by the straight-line method. On January 1, 2017, it leased the machine to Child Company for a three-year period at an annual rental of $128,000 to be paid at the end of each year. Beard could have sold the machine for $817,298 instead of leasing it. Child does not know the implicit rate in the lease, but it has an incremental rate of 9%. Child Company has a December 31 reporting year. It adopted early the provisions of ASC 842 on January 1, 2017.

Required:

What type of lease is this for Child Company?

What are the amounts of the right-of-use asset and lease liability that Child Company should report on its balance sheet at December 31, 2017?

How much rent expense should Child Company recognize in 2017?