Exercise 21-11 Laura Leasing Company signs an agreement on January 1, 2017, to lease equipment to Skysong Company. The following information relates to this agreement 1. The term of the noncancelable lease is 5 years with no renewal option. The equipment has an estimated economic life of 5 years 2. The fair value of the asset at January 1, 2017, is $83,100 The asset will revert tothe lessor at the end of the lease term, at which time the asset is expected to have a residual value of $7.600-none of which s guaranteed 4. Skysong Company assumes direct responsibility for all executory costs, which include the following annual amounts: (1) 5870 to Rocky Mountain insurance Company for insurance and (2) $1,590 to Laclede County for property taxes 5. The agreement requires equal annual rental payments of $18,79704 to the lessor, beginning on Jenuary 1, 2017 6. The lessee's incremental borrowing rate is 12%. The lessor?impica rate is 10% and is known to the lessee. 7. Skysong Company uses the straight-ine depreciation method for all equipment 8. Skysong uses reversing entries when appropriate