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Holiday leases some of the larger, specialty light and inflatable displays for longer periods. In...

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Accounting

Holiday leases some of the larger, specialty light and inflatable

displays for longer periods. In 2017, Holiday leased a patriotic display

to the city of Boston. The replica of the Boston Tea Party and Paul

Revere is on display in a city park. The details of the lease are as

follows:

Lease was signed January 1, 2017.

Lease term is 5 years. Asset life is 6 years. The lease is non-

cancelable.

The display is expected to have an estimated value of $35,000 at

the end of the lease term. Boston can purchase the display at the

end of the lease for $17,500.

The cost to produce the display was $343,000. The fair value of

the display is $775,000.

The lease payments are paid each January 1, with the first

payment made in 2017.

Holidays implicit rate is 12% and is known to the lessee.

Prepare journal entries for the lessee for 2017

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