On January 1, 20X1, Merchant Co. sold a tractor to Swanson Inc. and simultaneously leased it back for five years. The tractors fair value is $300,000, but its carrying value on Merchants books prior to the transaction was $200,000. The tractor has a seven-year remaining estimated useful life, and Merchant and Swanson both used 8% interest in evaluating the transaction. Merchant has agreed to make five payments of $57,976 beginning January 1, 20X1. Use tables (PV of 1, PVAD of 1, and PVOA of 1) (Use the appropriate factor(s) from the tables provided.) Required: What type of a lease is this for Merchant? Compute the amount of Merchants gain on the transaction. Prepare the January 1, 20X1, entries on Merchants books to account for the sale and leaseback.