On January 1, 2017, Kingbird Co. leased a building to Blossom Inc. The relevant information related to the lease is as follows 1. The lease arrangement is for 10 years. The building is expected to have a residual value at the end of the lease of $2,500,000 (unguaranteed) 2. The leased building has a cost of $3,000,000 and was purchased for cash on January 1, 2017 3. The building is depreciated on a straight-line basis. Its estimated economic life is 50 years with no salvage value 4. Lease payments are $250,000 per year and are made at the beginning of the year 5. Blossom has an incremental borrowing rate of 5%, and the rate implicit in the lease is unknown to Blossom 6. Both the lessor and the lessee are on a calendar-year basis (a) Your answer is partially correct. Try again Prepare the journal entries that Kingbird should make in 2017. (Credit account tities are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit 1/1/17 Buildings 3000000 Cash (To record cost of the building) Cash 3000000 250000 Unearned Lease Revenue 250000 (To record receipt of lease payment) 12/31/17 Unearned Lease Revenue 50000 Lease Revenue 50000 (To record the recognition of the revenue each period) Depreciation Expense 60000 Accumulated Depreciation-Leased Building 60000 (To record depreciation expense on the leased asset) On January 1, 2017, Kingbird Co. leased a building to Blossom Inc. The relevant information related to the lease is as follows 1. The lease arrangement is for 10 years. The building is expected to have a residual value at the end of the lease of $2,500,000 (unguaranteed) 2. The leased building has a cost of $3,000,000 and was purchased for cash on January 1, 2017 3. The building is depreciated on a straight-line basis. Its estimated economic life is 50 years with no salvage value 4. Lease payments are $250,000 per year and are made at the beginning of the year 5. Blossom has an incremental borrowing rate of 5%, and the rate implicit in the lease is unknown to Blossom 6. Both the lessor and the lessee are on a calendar-year basis (a) Your answer is partially correct. Try again Prepare the journal entries that Kingbird should make in 2017. (Credit account tities are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit 1/1/17 Buildings 3000000 Cash (To record cost of the building) Cash 3000000 250000 Unearned Lease Revenue 250000 (To record receipt of lease payment) 12/31/17 Unearned Lease Revenue 50000 Lease Revenue 50000 (To record the recognition of the revenue each period) Depreciation Expense 60000 Accumulated Depreciation-Leased Building 60000 (To record depreciation expense on the leased asset)