On January 1, 2025, Pearl Company contracts to lease equipment for 5 years, agreeing to make a payment of $144,548 at the beginning of each year, starting January 1, 2025. The leased equipment is to be capitalized at $593,000. The asset is to be amortized on a double-declining-balance basis, and the obligation is to be reduced on an effective-interest basis. Pearl's incremental borrowing rate is 12%, and the implicit rate in the lease is 11%, which is known by PearL. Title to the equipment transfers to Pearl at the end of the lease. The asset has an estimated useful life of 5 years and no residual value. Click here to view factor tables. What amounts will appear on the lessee's December 31, 2025, balance sheet relative to the lease contract