How to set boolean property value if object id is in another array of objects?

Your issue is that each time you iterate over your selectedData array using the outer .map() you're changing all the item ids you previously set to true back to false. Instead, you should use .map() by returning a new item each time you iterate. This can be done efficiently by creating a new Set of all ids which are in your selectedData and changing the selected property based on whether the set .has() the id of the current object:

const selectedData = [ { id: 5 }, { id: 6 } ];
const allServices = [ { id: 3, selected: false }, { id: 4, selected: false }, { id: 5, selected: false }, { id: 6, selected: false }, { id: 7, selected: false } ];

const lut = new Set(selectedData.map(({id}) => id));
const res = allServices.map(obj => ({...obj, selected: lut.has(obj.id)}));
console.log(res);

It will only consider the last item in selectedData array because every selected: true value set is being reset by the else block.

Another option is to create a Set of all the ids from selectedData. Loop through allServices and update the selected value based on whether the Set has the current object's id

const selectedData=[{id:5},{id:6}],
      allServices=[{id:3,selected:false},{id:4,selected:false},{id:5,selected:false},{id:6,selected:false},{id:7,selected:false},];
      
const set = new Set(selectedData.map(o => o.id));
allServices.forEach(o => o.selected = set.has(o.id))

console.log(allServices)

There are no breaks. You inspect all possible pairs, and assign to allServices[i].selected once for each value in selectedData. So allServices[3].selected is assigned with false and again false; allServices[6].selected is assigned with false, then true; but allServices[5].selected is assigned with true, then overwritten by false.

You would want the loops reversed, so that the inner one could be broken out of. Better yet, use some.

const changeStructure = (selectedData, allServices) => {
  allServices.forEach(value => {
    value.selected = selectedData.some(selected => selected.id == value.id)
  })
  console.log('final allServices', allServices);
  return allServices;
}

You can make a loop with allServices and compare the id in each element with the id of elements inside selectedData using forEach function. Like this:

var selectedData = [
 { id: 5 },
 { id: 6 }
];

var allServices = [
 { id: 3, selected: false },
 { id: 4, selected: false },
 { id: 5, selected: false },
 { id: 6, selected: false },
 { id: 7, selected: false },
];

allServices.forEach(x => x.selected = selectedData.find(a => a.id === x.id) !== undefined);

console.log(allServices);

Can you try simple code:

const selectedData = [
 { id: 5 },
 { id: 6 }
];

const allServices = [
 { id: 3, selected: false },
 { id: 4, selected: false },
 { id: 5, selected: false },
 { id: 6, selected: false },
 { id: 7, selected: false }
];

const res = allServices.map(service => ({...service , selected: selectedData.findIndex(selected => selected.id === service.id) >-1 }));
console.log(res);

Here is my solution. It looks quite simple.

const changeStructure = (selectedData, allServices) => {
    allServices.forEach(item => {
        item.selected = selectedData.some(sel => sel.id === item.id);
    });

    console.log('final allServices', allServices);
    return allServices;
}