Metlock Industries and Bonita Inc. enter into an agreement that requires Bonita Inc. to build three diesel$-$electric engines to Metlock's specificationsUpon completion of the engines, Metlock has agreed to lease them for a period of $10$ years and to assume all costs and risks of ownership. The lease is non$-$cancelable, becomes effective on January $1,2025,$ and requires annual rental payments of $ $388,121$ each January $1,$ starting January $1,2025.$ Metlock's incremental borrowing rate is $8\%$The implicit interest rate used by Bonita and known to Metlock is $6\%$The total cost of building the three engines is $$2,637,000.$ The economic life of the engines is estimated to be $10$ years, with residual value set at zero. Metlock depreciates similar equipment on a straight$-$line basis. At the end of the lease $,$ Metlock assumes title to the engines. Collectibility of the lease payments is probable.