Cullumber Corp., which uses IFRS, signs a 4-year, non-cancellable lease agreement to lease equipment from Labelle Ltd. The following information concerns the lease agreement. 1. 2. 3. The equipment's fair value on July 1, 2020 is $282,000. The agreement requires equal rental payments of $58,700 beginning on July 1, 2020. The equipment has an estimated economic life of 5 years, with an unguaranteed residual value of $87,300. Cullumber Corp. depreciates similar equipment using the straight-line method, with no residual value. The lease is non-renewable. At the termination of the lease, the equipment reverts to Labelle. Cullumber's incremental borrowing rate is 6% per year. The lessor's implicit rate is not known by Cullumber Corp. The yearly rental payment includes $2,615.24 of executory costs related to insurance on the equipment. 4. 5. 6. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE. Your answer is correct. Using (1) factor tables, (2) a financial calculator, or (3) Excel functions, calculate the amount of the right-of-use asset and lease liability. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275.) $ 206000 The amount of the right-of-use asset Prepare the subsequent journal entries on Cullumber Corps books to record the payments and expenses related to this lease for the years 2020 and 2021 as well as any adjusting journal entries at its fiscal year ends of December 31, 2020 and 2021. Cullumber does not use reversing entries. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter Ofor the amounts. Round answers to 2 decimal places, e.g. 5,125.76.) Date Account Titles and Explanation Debit Cred Dec. 31, 2020 Insurance Expense 1307.62 Prepaid Insurance (To record insurance expense) Depreciation Expense Accumulated Depreciation - Right-of-Use Asset (To record depreciation) Interest Expense 4497.46 (To record interest) July 1, 2021 Interest Expense 4497.46 Prepaid Insurance Cash Insurance Expense 1307.62 Prepaid Insurance (To record insurance expense) Insurance Expense 1307.62 Prepaid Insurance (To record insurance expense) Depreciation Expense Accumulated Depreciation - Right-of-Use Asset (To record depreciation) Interest Expense 3084.67 (To record interest)