Blossom Company, a machinery dealer, leased manufacturing equipment to Mays Corporation on January 1, 2017. The lease is for a 7-year period and requires equal annual payments of $22,370 at the beginning of each year. The first payment is received on January 1, 2017. Blossom had purchased the machine during 2016 for $71,000. Collectibility of lease payments is reasonably predictable, and no important uncertainties surround the amount of costs yet to be incurred by Blossom. Blossom set the annual rental to ensure an 7% rate of return. The machine has an economic life of 8 years with no residual value and reverts to Blossom at the termination of the lease.