On January 1, 2020, Cullumber Corp., which uses IFRS, signs a 10-year, non-cancellable lease agreement to lease a specialty lathe from Liu Inc. The following information concerns the lease agreement.

1.		The agreement requires equal rental payments of $69,478 beginning on January 1, 2020.
2.		The lathes fair value on January 1, 2020, is $470,000.
3.		The lathe has an estimated economic life of 12 years, with an unguaranteed residual value of $15,000. Cullumber Corp. depreciates similar equipment using the straight-line method.
4.		The lease is non-renewable. At the termination of the lease, the lathe reverts to the lessor.
5.		Cullumbers incremental borrowing rate is 9% per year. The lessors implicit rate is not known by Cullumber Corp.
6.		The yearly rental payment includes $2,289.52 of executory costs related to insurance on the lathe.