Cleveland Inc. leased a new crane to Abriendo Construction under a 5-year noncancelable contract starting January 1, 2012. Terms of the lease require payments of $33,000 each January 1, starting January 1, 2012. Cleveland will pay insurance, taxes, and maintenance charges on the crane, which has an estimated life of 12 years, a fair value of $240,000, and a cost to Cleveland of $240,000. The estimated fair value of the crane is expected to be $45,000 at the end of the lease term. No bargain-purchase or renewal options are included in the contract. Both Cleveland and Abriendo adjust and close books annually at December 31. Collectibility of the lease payments is reasonably certain, and no uncertainties exist relative to unreimbursable lessor costs. Abriendos incremental borrowing rate is 10%, and Clevelands implicit interest rate of 9% is known to Abriendo.

Prepare all the entries related to the lease contract and leased asset for the year 2012 for the lessee and lessor, assuming the following amounts. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

(1)		Insurance $500.
(2)		Taxes $2,000.
(3)		Maintenance $650.
(4)		Straight-line depreciation and salvage value $15,000.

All expense are paid as incurred.