On January 1, 2019, Concord Corp. signs a contract to lease nonspecialized manufacturing equipment from Stone Inc. Concord agrees to make lease payments of $47,500 per year. Additional information pertaining to the lease is as follows:

1.	The term of the noncancelable lease is 3 years, with a renewal option at the end of the lease term. Payments are due every January 1, beginning January 1, 2019.
2.	The fair value of the manufacturing equipment on January 1, 2019, is $150,000. The equipment has an economic life of 7 years.
3.	Concord guarantees that the equipment will have a residual value of $15,000 at the end of the lease term. Concord considers it probable that it will have to pay $5,000 cash at the end of the lease terms to satisfy this residual value guarantee.
4.	Concord Corp. depreciates similar assets using the straight-line method.
5.	Concords incremental borrowing rate is 12% per year; Stones implicit interest rate is 10% and known by Concord.
6.	Concord pays $2,500 per year for maintenance of the equipment and $1,000 in property taxes directly to the applicable third party.

Concord Corp.

Summary of Lease Payments and Interest Expense

1	Date	Annual Lease Payment	Interest at 10%	Lease Liability
2	January 1, 2019: Before the Initial Payment
3	January 1, 2019
4	December 31, 2019
5	January 1, 2020
6	December 31, 2020
7	January 1, 2021
8	December 31, 2021*
9	* Include the final entry to eliminate the lease liability at December 31, 2021.