Laura Leasing Company signs an agreement on January 1, 2020, to lease equipment to Crane Company. The following information relates to this agreement. 1. The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years. 2. The fair value of the asset at January 1, 2020, is $75,000. 3. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $8,000, none of which is guaranteed. 4. The agreement requires equal annual rental payments of $23,522.48 to the lessor, beginning on January 1, 2020. 5. The lessee's incremental borrowing rate is 5%. The lessor's implicit rate is 4% and is unknown to the lessee. 6. Crane uses the straight-line depreciation method for all equipment. Date Account Titles and Explanation Debit 1/1/20 1/1/20 Right-of-Use Asset Lease Liability (To record the lease) Lease Liability Cash (To record lease liability) 12/31/20 Lease Expense Lease Liability Right-of-Use Asset 67260.41 23522.48 Credit 67260.41 23522.48