The following facts are for a non-cancellable lease agreement between Pharoah Corporation and Russell Corporation, a lessee: Inception date Annual lease payment due at the beginning of each year, starting July 1, 2020 July 1, 2020 $ 20,442.46 Bargain purchase option price at end of lease term reasonably certain to be exercised by Russell $ 4,200.00 Lease term Economic life of leased equipment Lessor's cost Fair value of asset at July 1, 2020 Lessor's implicit rate Lessee's incremental borrowing rate 5 years 10 years $ 47,400.00 $ 89,400.00 9% 9% The collectibility of the lease payments is reasonably predictable, and there are no important uncertainties about costs that have not vet been incurred by the lessor. The lessee assumes responsibility for all executory costs. Both Russell and Pharoah use IFRS 16.