On January 1, 2013, Holbrook Company leased a building under a three-year operating lease. The annual rental payments are $68,000 on January 1, 2013, the inception of the lease, and $50,000 January 1 of 2014 and 2015. Holbrook made structural modifications to the building costing $90,000 before occupying the building. The useful life of the building and the modifications is 30 years with no expected residual value.
Required:
Prepare the appropriate journal entries for Holbrook Company for 2013. Holbrook's fiscal year is the calendar year, and the company uses straight-line depreciation.