On January 1, 2010, Velde Company (lessee) entered into a four-year, noncancellable contract to lease a computer from Exceptional Computer Company (lessor). Annual rentals of $17,208 are to be paid each January 1, Velde will assume responsibility for all normal ownership costs, and at the end of the lease period the computer will be returned to Exceptional Computer Company. The cost of the computer to Exceptional Computer Company was $60,000 and it had an estimated useful life of four years and no residual value Velde has an incremental borrowing rate of 12% but has knowledge that Exceptional Computer Company used a rate 10% in setting annual rentals. Collection of the rentals is reasonably predictable and there are no important uncertainties regarding future unreimbursable costs to be incurred by the lessor. On January 1, 2010, Velde Company (lessee) entered into a four-year, noncancellable contract to lease a computer from Exceptional Computer Company (lessor). Annual rentals of $17,208 are to be paid each January 1, Velde will assume responsibility for all normal ownership costs, and at the end of the lease period the computer will be returned to Exceptional Computer Company. The cost of the computer to Exceptional Computer Company was $60,000 and it had an estimated useful life of four years and no residual value Velde has an incremental borrowing rate of 12% but has knowledge that Exceptional Computer Company used a rate 10% in setting annual rentals. Collection of the rentals is reasonably predictable and there are no important uncertainties regarding future unreimbursable costs to be incurred by the lessor