Problem 21-6 The following facts pertain to a noncancelable lease agreement between Faldo Leasing Company and Blossom Company, a lessee. Inception date Annual lease payment due at the beginning of January 1, 2017 $117,006 $53,000 each year, beginning with January 1, 2017 Residual value of equipment at end of lease term, guaranteed by the lessee Lease term 6 years 6 years Economic life of leased equipment Fair value of asset at January 1, 2017 Lessor's implicit rate Lessee's incremental borrowing rate 554,000 13% 13% The lessee assumes responsibility for all executory costs, which are expected to amount to $5,200 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 $53,000. The lessee uses the straight-line depreciation method for all equipment