On January 1, 2020, 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.

1.		The agreement requires equal rental payments of $76,195 beginning on January 1, 2020.
2.		The lathes 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 $18,000. Crane 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.		Cranes incremental borrowing rate is 10% per year. The lessors implicit rate is not known by Crane Corp.
6.		The yearly rental payment includes $2,219.82 of executory costs related to insurance on the lathe

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

Prepare the journal entries on Crane Corp.s books to record the payments and expenses related to this lease for the years 2020 and 2021 as well as any adjusting journal entries at its fiscal year ends of December 31, 2020 and 2021. Crane does not use reversing entries. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 5,275.25.)