c) The information below relates to a leasing arrangement between Frankfield Leasing Company and Boswell Manufacturing Company, a lessee. Inception date Lease term (non cancellable) Annual lease payment due at the beginning of each year beginning January 1, 2020 Fair value of asset at January 1, 2020 Economic life of leased equipment January 1, 2020 5 years $28,500 $130,000 Residual value of equipment at end of lease 6 years $25,270 term, unguaranteed by the lessee Lessor's implicit rate (not known by the lessee) 6% Lessee's incremental borrowing rate 8% The asset will revert to the lessor at the end of the lease term. There is an expected residual value of $25,270 which is unguaranteed by the lessee. The lessee uses the straight-line depreciation method for all equipment. (Round all figures to the nearest $1.)