$3$ OF $10$ QUESTIONS REMAINING

On January $1,$ Year $1,$ Porter Corporation signed a five$-$year non$-$cancelable lease for certain machinery. The terms of the lease called for:

Price to make annual payments of $$60,000$ at the end of each year $($starting on Dec. $31,$ Year $1)$ for five years. Porter must return the equipment to the lessor end of this period.

The machinery has an estimated useful life of $6$ years and no expected salvage value.

Porter uses the straight$-$line method of depreciation for all of its fixed assets.

Porter's incremental borrowing rate is $8\%.$

The fair value of the asset at January $1,$ Year $1$ is $$275,00$

At January $1,$ Year $1,$ Porter should record an asset and liability with respect to the equipment lease equal to:

$$258,726$

$$239,562$

$$275,000$

$$300,000$