On January 1, 2020, Blossom 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. 1. The agreement requires equal rental payments of $75,975 beginning on January 1, 2020. 2. The lathe's fair value on January 1, 2020, is $500,000. 3. The lathe has an estimated economic life of 12 years, with an unguaranteed residual value of $17,000. Blossom Corp. depreciates similar equipment using the straight-line method. 4. The lease is non-renewable. At the termination of the lease, the lathe reverts to the lessor. 5. 6. Blossom's incremental borrowing rate is 10% per year. The lessor's implicit rate is not known by Blossom Corp. The yearly rental payment includes $1,999.82 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 Your answer is partially correct. 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. (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 O for the amounts. Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 2 decimal places, e.g. 5,275.25.) Date Account Titles and Explanation 1/1/20 Right-of-Use Asset Insurance Expense Lease Liability Cash Debit 500000 2269.82 Credit 42602482 76245