60.1K
Verified Solution
Link Copied!
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
Answer & Explanation
Solved by verified expert
