15. On January 1, 2022, a company leased a land and building from an unrelated lessor for a 10- year term. The lease had a renewal option for an additional 5 years, but the entity has not reached a decision with regard to the renewal option. In early 2020, the entity completed three improvements to the property: Improvement 1 Improvement 2 Improvement 3 10 years 8 years 12 years P 940,000 1,500,000 360,000 What amount of depreciation of leasehold improvements will be reported in 2022? a. P199,228 b. P280,000 c. P311,500 d. P317,500
15. On January 1, 2022, a company leased a land and building from an unrelated lessor for a 10- year term. The lease had a renewal option for an additional 5 years, but the entity has not reached a decision with regard to the renewal option. In early 2020, the entity completed three improvements to the property: Improvement 1 Improvement 2 Improvement 3 10 years 8 years 12 years P 940,000 1,500,000 360,000 What amount of depreciation of leasehold improvements will be reported in 2022? a. P199,228 b. P280,000 c. P311,500 d. P317,500
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter17: Business Tax Credits And The Alternative Minimum Tax
Section: Chapter Questions
Problem 11P
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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