Pharoah Leasing Company leases a new machine to Sharrer Corparation. The machina has a cost of $65,000 and fair value of $87,500. Under the 3-year, non-zancelable contract, Sharrer will receive title to the machine at the and of the lese. The machine has a 3 -yas usaful life and no residual valua. The lasa was signed on January 1, 2020 . Pharoah expects to aarn an 84 raturn on its investrment, and this implicit rate is known by Sharrer. The annual rentals are payable on each December 31, bexinning December 31,2020