Laura Leasing Company signs an agreement on January 1, 2020, to lease equipment to Windsor 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 $73,000. 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 $10,000, none of which is guaranteed. 4. The agreement requires equal annual rental payments of $22,213.44 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. Windsor uses the straight-line depreciation method for all equipment. Date1/1/20VRight-of-UseAssetAccountTitlesandExplanation Lease Liability (To record the lease) \begin{tabular}{ll} \hline 1/1/20v Lease Liability \\ & Cash \end{tabular} 22213.44 (To record lease liability) 12/31/20 Lease Liability Right-of-Use Asset 21172.44