The following facts pertain to a non$-$cancelable lease agreement between Faldo Leasing Company and Vance Company, a lessee. Commencement date January $1,2020$ Annual lease payment due at the beginning of each year, beginning with January $1,2020$ $$113,864$ Residual value of equipment at end of lease term, guaranteed by the lessee $$50,000$ Expected residual value of equipment at end of lease term $$45,000$ Lease term $6$ years Economic life of leased equipment $6$ years Fair value of asset at January $1,2020$ $$600,000$ Lessors implicit rate $8\%$ Lessees incremental borrowing rate $8\%$ The asset will revert to the lessor at the end of the lease term. The lessee uses the straight$-$line amortization for all leased equipment.