On January 2, 2017 Skysong Company leases a machine with a fair value of $37,000 from Snead, Inc., on the following terms: 1. Noncancelable term of 4 years. 2. Rental of $9,525 per year (at beginning of each year). 3. Estimated residual value after 4 years is $8,600. Skysong Company guarantees the residual value of $4,300 and expects the asset to have a value of $4,300 at the end of the lease. 4. Estimated economic life of the machine is 5 years. 5. Skysong Companys incremental borrowing rate is 10% a year. Sneads implicit rate is unknown.