Pharoah Leasing Company leases a new machine to Sharrer Corporation. The machine has a cost of $$65,000$ and fair value of $$87,500.$ Under the $3-$year, non$-$cancelable contract, Sharrer will receive title to the machine at the end of the lease. The machine has a $3-$year useful life and no residual value. The lease was signed on January $1,2020.$ Pharoah expects to earn an $8\%$ return on its investment, and this implicit rate is known by Sharrer. The annual rentals are payable on each December $31,$ beginning December $31,2020.$