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Rumsfeld Corporation leased a machine on December 31, 2018, for a three-year period. The lease agreement calls for annual payments in the amount of $13,000
Rumsfeld Corporation leased a machine on December 31, 2018, for a three-year period. The lease agreement calls for annual payments in the amount of $13,000 on December 31 of each year beginning on December 31, 2018. Rumsfeld has the option to purchase the machine on December 31, 2021, for $17,000 when its fair value is expected to be $27,000. The machine's estimated useful life is expected to be four years with no residual value. The appropriate interest rate for this lease is 8%. n/i 1 period, 8% 2 periods, 8% 3 periods, 8% PV of $1 .92593 .85734 .79383 PV, ordinary annuity .92593 1.78326 2.57710 PV, annuity due 1.00000 1.92593 2.78326 Required: 1. Calculate the amount to be recorded as a right-of-use asset and the associated lease payable. 2. Prepare Rumsfeld's journal entries for this lease for 2018 and 2019
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