Teal Leasing Company agrees to lease equipment to Flint Corporation on January $1,2025.$ The following information relates to the lease agreement.

The term of the lease is $7$ years with no renewal option, and the machinery has an estimated economic life of $9$ years.

The cost of the machinery is $$575,000,$ and the fair value of the asset on January $1,2025,$ is $$755,000.$

At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $$50,000.$ Flint estimates that the expected residual value at the end of the lease term will be $$50,000.$ Flint amortizes all of its leased equipment on a straight$-$line basis.

The lease agreement requires equal annual rental payments, beginning on January $1,2025.$

The collectibility of the lease payments is probable.

Teal desires a $9\%$ rate of return on its investments. Flint's incremental borrowing rate is $10\%,$ and the lessor's implicit rate is unknown.

$($Assume the accounting period ends on December $31.)$

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