What is the accounting issue?

Quality entered into a leasing agreement with the provincial government at the beginning of the recently ended fiscal year. Quality was granted access to the timber resources from a parcel of province-owned land for a period of five years. Quality commenced harvesting the timber right away. A condition of this agreement is that Quality replant trees at the end of the five-year lease agreement. Quality estimates that this will cost $500,000 at the end of five years. Eight percent is the appropriate discount rate to reflect this transaction. This obligation has not been recorded in the financial statements. This lease has already been analyzed and is being properly treated as an operating lease in accordance with ASPE 3065.