The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Sandhill Company, a lessee. January 1, $121.571 Commencement date Annual lease payment due at the beginning of each year, beginning with January 1. Residual value of equipment at end of lease term, guaranteed by the lessee Expected residual value of equipment at end of fease term Lease term Economic life of leaned equipment Fair value of asset at January 1, Lessor's implicitate Lessee's incremental borrowing rate $54,000 $49.000 6 years 6 years 5641.000 8 % 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 Annual Lease Payment Plus GRV Sate Interest on Liability Reduction of Lease Liability Lease Liabi 120 5 $ $ $ 120 121 122 123 124 125 31/26 5