Southwestern Edison Company leased equipment from Hi$-$Tech Leasing on January $1,2024.$ Hi$-$Tech manufactured the equipment at a cost of $$87,500.$

Other information:

Lease term $4$ years

Annual payments $$35,000$ on January $1$ each year

Life of asset $4$ years

Fair value of asset $$125,199$

Implicit interest rate $8\%$

Incremental rate $8\%$