Sheridan Inc. leased a new crane to Grouper Construction under a $5-$year, non$-$cancelable contract starting January $1,2025.$ Terms of

the lease require payments of $$46,000$ each January $1,$ starting January $1,2025.$ The crane has an estimated life of $7$ years, a fair value

of $$230,000,$ and a cost to Sheridan of $$230,000.$ The estimated fair value of the crane is expected to be $$35,000($unguaranteed$)$ at

the end of the lease term. No bargain purchase or renewal options are included in the contract, and it is not a specialized asset. Both

Sheridan and Grouper adjust and close books annually at December $31.$ Collectibility of the lease payments is probable. Grouper's

incremental borrowing rate is $6\%,$ and Sheridan's implicit interest rate of $6\%$ is known to Grouper.

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$($a$)$

Your answer is correct.

Identify the type of lease involved.

The lease is classified as an

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$($b$)$

Prepare all the entries related to the lease contract and leased asset for the year $2025$ for the lessee and lessor, assuming Grouper

uses straight$-$line amortization for all similar leased assets, and Sheridan depreciates the asset on a straight$-$line basis with a

salvage value of $$12,000.($Credit account titles are automatically indented when 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 present value factor calculations to $5$ decimal places,

e$.$g$.1\mathrm{.}25125$ and the final answer to $0$ decimal places eg$.58,972.$ List all debit entries before credit entries.$)$