Question 2 of 7 -/44 View Policies Current Attempt in Progress 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. 2. 3. The agreement requires equal rental payments of $78,276 beginning on January 1, 2020. The lathe's fair value on January 1, 2020, is $530,000. The lathe has an estimated economic life of 12 years, with an unguaranteed residual value of $17,000. Cullumber Corp. depreciates similar equipment using the straight-line method. The lease is non-renewable. At the termination of the lease, the lathe reverts to the lessor. Cullumber's incremental borrowing rate is 9% per year. The lessor's implicit rate is not known by Cullumber Corp. The yearly rental payment includes $2.510.27 of executory costs related to insurance on the lathe. 4. 5. 6. Assume this is a manufacturer/dealer lease. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. Assume that Cullumber's fiscal year end is May 31. Prepare the journal entries on Cullumber Corp's books to reflect the signing of the lease agreement and to record payments and expenses related to this lease for the calendar years 2020 and 2021. Cullumber does not prepare 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 for the amounts. Round answers to 2 decimal places, eg. 52.75.) Date Account Titles and Explanation Debit Credit 1/1/20 (To record lease payment.) 5/31/20 (To record depreciation expense.) Question 2 of 7 - / 44 (To record depreciation expense.) 5/31/20 (To record interest.) 12/31/20 (To record expired insurance.) 1/1/21 (To record lease payment.) 5/31/21 (To record depreciation expense.) 5/31/21 (To record interest.) 12/31/21 (To record expired insurance.)