Rumsfeld Corporation leased a machine on December 31, 2016, for a three -year period. The lease agreement calls for annual payments in the amount of $15,000 on December 31 of each year beginning on December 31, 2016. Rumsfeld has the option to purchase the machine on December 31, 2019, for $16,000 when its fair value is expected to be $26,000. The machine's estimated useful life is expected to be five years with no residual value. Rumsfeld uses straight-line depreciation for this type of machinery. The appropriate interest rate for this lease is 12%. n/i PV of $1 PV, ordinary annuity PV, annuity due 1 period, 12% .89286 .89286 1.00000 2 periods, 12% .79719 1.69005 1.89286 3 periods, 12% .71178 2.40183 2.69005

Required:

1.	Calculate the amount to be recorded as a leased asset and the associated lease liability. Asset: repare Rumsfeld's journal entries for this lease for 2016 and 2017. Record the lease record cash paymnent on 12.31.16 and 12/31/17 record depreiciation expense 12/31/17