On January $1,2023,$ Crane Corp., which uses IFRS, signs a $10-$year, non$-$cancellable lease agreement to lease a specialty lathe from Liu Inc. The following information concerns the lease agreement.

The agreement requires equal rental payments of $$69,310$ beginning on January $1,2023.$

The lathe's fair value on January $1,2023,$ is $$470,000.$

The lathe has an estimated economic life of $12$ years, with an unguaranteed residual value of $$17,000.$ Crane depreciates similar equipment using the straight$-$line method.

The lease is non$-$renewable. At the termination of the lease, the lathe reverts to the lessor.

Crane's incremental borrowing rate is $9\%$ per year. The lessor's implicit rate is not known by Crane.

The yearly rental payment includes $$2,121\mathrm{.}52$ of executory costs related to insurance on the lathe.

Assume this is a manufacturer$/$dealer lease.

Click here to view the factor table PRESENT VALUE OF $1.$

Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE.

$($a$)$

Using $(1)$ factor tables, $(2)$ a financial calculator, or $(3)$ Excel functions, calculate the amount of the right$-$of$-$use asset and lease liability and prepare the initial entry to reflect the signing of the lease agreement. $($List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select $"$No Entry" for the account titles and enter $0$ for the amounts. Round factor values to $5$ decimal places, e$.$g$.1\mathrm{.}25124$ and final answers to $2$ decimal places, e$.$g$.5,275\mathrm{.}25.)$

Date Account Titles and Explanation

Debit

Credit

$\frac{1}{1}\frac{?}{23}$

Right$-$or$-$Use Asset $$

insu