Assume that on January $1,2025,$ Swifty Corporation sells equipment to Crane Finance Co$.$for $$1,740,000$ and immediately leases back the equipment. The relevant information is as follows.

The equipment was carried on Swifty's books at a value of $$1,530,000.$

The term of the non$-$cancelable lease is $3$ years; title will not transfer to Swifty, and the expected residual value at the end of the lease is $$114,750,$ all of which is unguaranteed.

The lease agreement requires equal rental payments of $$283,185$ at the beginning of each year.

The incremental borrowing rate for Swifty is $6\%.$ Swifty is aware that Crane Finance set the annual rental to ensure a rate of return of $6\%.$

The equipment has a fair value of $$1,740,000$ on January $1,2025,$ an estimated economic life of $10$ years and will be depreciated using the straight$-$line method.

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Prepare the journal entries for both the lessee and the lessor for $2025$ to reflect the sale and leaseback agreement. $($Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries. If no entry is required, select $"$No Entry" for the account titles and enter $0$ for the camounis., Round present value factor calculations to $5$ decimal places, eg$.1\mathrm{.}25124$ and the final answer to $0$ decimall places e$\mathrm{.}8.5,275.)$

Date Account Titles and Explanation

Debit

Credit

Swifty Corporation $($Seller$-$Lessee$)$