Crane Co$.$ leased machinery from Young, Inc. on January $1,2025.$ The lease term was for $8$ years, with equal annual rental payments of $$5,600$ at the beginning of each year. In addition, the lease provides an option to purchase the machinery at the end of the lease term for $$2,500,$ which Crane is reasonably certain it will exercise as it believes the fair value of the machinery will be at least $$5,000.$ The machinery has a useful life of $10$ years and a fair value of $$39,000.$ The implicit rate of the lease is not known to Crane. Crane's incremental borrowing rate is $10\%.$

Prepare Crane's $2025$ journal entries. $($List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. For calculation purposes, use $5$ decimal places as displayed in the factor table provided and round final answers to $0$ decimal places, e$.$g$.5,275.$ If no entry is required, select $"$No Entry" for the account titles and enter $0$ for the amounts. Record joumal entries in the order presented in the problem.$)$

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Date

Account Titles and Explanation

Debit

Credit

$($To record lease liability$)$

$$

$$

$$

$($To record lease payment$)$

$12/31/25$

$$

$($To record interest expense$)$

Amortization Expense

$($To record amortization of the right$-$of$-$use asset$)$

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