Holiday leases laser cutters used in their manufacturing process.

The details of this lease is as follows:

Lease was signed on January 1, 2016.

Lease term is 6 years. Asset life is 7 years. The lease is non-

cancelable.

Payments of are due on December 31 of each year.

Holidays implicit rate is 8%, the lessors rate is not known.

The fair value of the equipment on January 1, 2014 was

$4,250,000

Prepare journal entries for the lessor for 2017