Problem 21-6 The following facts pertain to a noncancelable lease agreement between Faldo Leasing Company and Vance Company, a lessee. Inception date January 1, 2014 Annual lease payment due at the beginning of each year, beginning with January 1, 2014 $133,227 Residual value of equipment at end of lease term, $58,000 guaranteed by the lessee Lease term 6 years Economic life of leased equipment 6 years Fair value of asset at January 1, 2014 $671,000 Lessor's implicit rate 10% Lessee's incremental borrowing rate 100 The lessee assumes responsibility for a executory costs, which are expected to amount to $5,040 per year. The asset will revert to the lessor at the end of the lease term. The lessee has guaranteed the lessor a residual value of $58,000. The lessee uses the straight-line depreciation method for all equipment