On January 1, 2020, Sitra Company leased equipment from National Corporation. Lease payments are lease is non-cancelable The following information pertains to the agreement 1. The fair value of the equipment on January 1, 2020 is $2,550,000. 2. The estimated economic life of the equipment was 25 years on January 1, 2020 with guaranteed residual value of $75,000 3. The lease is non-renewable. At the termination of the lease, the equipment reverts to the lessor 4. The lessor's implicit rate is 10% which is known to Sitra. Sitra's incremental borrowing rate is 12% (The PV of $1 for 20 periods at 10% is 0.14864 and the PV for an ordinary annuity of $1 for 20 periods at 10% is 8.51356)