A 16 year old student orally entered into a 5-year contract of lease of car at a rent of P500/year with a leasing company. a. Perfectly Valid b. Rescissible c. Voidable d. Unenforceable e. Void
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A 16 year old student orally entered into a 5-year contract of lease of car at a rent of P500/year with a leasing company.
a. Perfectly Valid
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- Brown Corporation owns an office building and leases the offices under a one-year rental agreement. Not all tenants make timely payments of their rent. The following information were from the company’s records.2020: Rental receivable - P96,0002021: Rental receivable - P124,0002020: Unearned rentals - P320,0002021: Unearned rentals - P240,000During the year 2021, Brown received rental payments of P800,000 from its tenants. Under the accrual basis, how much is the rental revenue of Brown Corporation for the year 2021?Ravis Rent-A-Car Company leases a car to Ira Reem, an employee, on January 1, 2019. The term of the noncancelable lease is 4 years. The following information about the lease is provided: 1. Title to the car passes to Ira on the termination of the lease with no additional payment required by the lessee. 2. The cost and fair value of the car is $8,400. The car has an economic life of 5 years. 3. The interest rate implicit in the lease is 10%. 4. It is probable that Ravis will collect the lease payments. 5. Equal annual lease payments are due at the end of each year. Prepare a table summarizing the lease receipts and interest income earned by the Ravis Rent-A-Car for the 4-year lease term. Additional Instructions Ravis Rent-A-Car Company Summary of Lease Payments Received and Interest Income Earned (by Interest Method) 1 Date Annual Lease Payments Received Interest Income at 10% on Lease Receivable Reduction of Lease Receivable Lease…Ravis Rent-A-Car Company leases a car to Ira Reem, an employee, on January 1, 2019. The term of the noncancelable lease is 4 years. The following information about the lease is provided: 1. Title to the car passes to Ira on the termination of the lease with no additional payment required by the lessee. 2. The cost and fair value of the car is $8,400. The car has an economic life of 5 years. 3. The interest rate implicit in the lease is 10%. 4. It is probable that Ravis will collect the lease payments. 5. Equal annual lease payments are due at the end of each year. 3a. Prepare the journal entries for 2019. PAGE 2019 GENERAL JOURNAL DATE ACCOUNT TITLE DEBIT CREDIT 1 2 3 4 5 6 7 3b. Prepare the journal entries for 2020. PAGE 2020 GENERAL JOURNAL DATE ACCOUNT TITLE DEBIT…
- Aokiji Company is a car dealer. On January 1, 2020, the entity entered into a finance lease with a customer under which the customer would pay P 200,000 on January 1 each year for 5 years, commencing in 2020. The cost of the car is P 600,000 and the cash selling price was P 750,000. The entity paid legal fees of P 20,000 to a law firm in connection with the arrangement of the lease. What amount of gross profit on sale should be recognized for the year ended December 31, 2020? Show your solution.Lorene, Inc., owns an apartment complex. The terms of Lorenes lease agreement require new tenants to pay the first and last months rent and a cleaning deposit at the inception of the lease. The cleaning deposit is returned when tenants move out and leave their apartment in good condition. If the apartment is not in good condition, Lorene hires a cleaning company and uses the tenants deposit to pay the cleaning bill, with any excess deposit returned. During the current year, Lorene receives monthly rents totaling 28,000, last months rent deposits from new tenants of 8,000, and cleaning deposits of 7,000. Lorene keeps 5,000 in cleaning deposits to pay the cleaning company bill on apartments that are not left in good shape (the 5,000 is the actual cost that is paid in cash to the cleaning company) and returns 4,000 in deposits. Lorenes expenses related to the rental property (other than the cleaning costs) are 14,000. What is Lorene, Inc.s gross income from the rental property if Lorene is a cash basis taxpayer? an accrual basis taxpayer?Peter Andrus owned an apartment building that he had insured under a fire insurance policy sold by J.C. Durick Insurance (Durick). Two months prior to the expiration of the policy, Durick notified Andrus that the building should be insured for $48,000 (or 80 percent of the building’s value), as required by the insurance company. Andrus replied that (1) he wanted insurance to match the amount of the outstanding mortgage on the building (i.e., $24,000) and (2) if Durick could not sell this insurance, he would go elsewhere. Durick sent a new insurance policy in the face amount of $48,000 with the notation that the policy was automatically accepted unless Andrus notified him to the contrary. Andrus did not reply. However, he did not pay the premiums on the policy. Durick sued Andrus to recover these premiums. Who wins?
- YELLOW Company owns an office building and leases the offices under a variety of rental agreements involving rent paid in advance monthly or annually. Not all tenants make timely payments of their rent. The following data were taken from the trial balance of YELLOW: Rentals receivable were 96,000 and 124,000 for 2020 and 2021 respectively; Unearned rentals were P 320,000 and P240,000 for 2020 and 2021 respectively. During 2021, YELLOW received P 800,000 cash from tenants. What amount of rental revenue should YELLOW record for 2021?CB owns an office building and leases the office spaces under a one-year rental agreement. Not all tenants make timely payments of their rent. During 2021, CB, Inc. received P800,000 from tenants. The company’s statement of financial position on December 31, 2020 reported Rent Receivable of P96,000 and Unearned Rent Revenue of P320,000. The statement of financial position on December 31, 2021 and income statement for the year ended December 31, 2021 reported Rent Receivable and Rent Revenue of P124,000 and P908,000, respectively. How much was CB’s unearned rent revenue on December 31, 2021?JJF enters into the lease of a piece of machinery for P1,000 per annum for 5 years on Jul 1, 2022. JJF is granted a rent-free period in the first year and elects to apply the low-value exemption in IFRS 16. Calculated the annual rental expense to be recognized through profit or loss for the year ended December 31, 2022. a. 800 B. 500 C. 400 D. Nil
- Wall Co. leased office premises to Fox, Inc. for a five-year term beginning January 2, 20x9. Under the terms of the operating lease, rent for the first year is P8,000 and rent for years 2 through 5 is P12,500 per annum. However, as an inducement to enter the lease, Wall granted Fox the first six months of the lease rent-free. In its December 31, 20x9, balance sheet, what amount should Wall report as rent receivable?Wall Co. leased office premises to Fox, Inc. for a five-year term beginning January 2, 20x9. Under the terms of the operating lease, rent for the first year is P8,000 and rent for years 2 through 5 is P12,500 per annum. However, as an inducement to enter the lease, Wall granted Fox the first six months of the lease rent-free. In its December 31, 20x9, income statement, what amount should Fox report as rent expense?4. On September 1, 2021, DHI Sound System Company leased office furniture and equipment at a monthly rental of ₱40,000 for 3 years expiring August 31, 2024. As an inducement for DHI to enter into lease, the lessor permitted DHI to use the asset rent-free from September 1 to November 30, 2021. For the year ended December 31, 2021, how much TOTAL expense should DHI record related to the leased asset? 5. On January 1, 2020, EEE Corp. leased a warehouse for 5 years at an annual rental of ₱575,000 payable every December 31. The equipment had an estimated life of 8 years and shall revert back to the lessor at the expiration of the lease term. The lessee paid the lessor a lease bonus of ₱250,000 and was also responsible as per the lease agreement to pay the broker fees and commission amounting to ₱180,000. As an incentive however, the lessor shall reimburse EEE Corp. 75% of the said initial direct cost. The implicit lease rate known to both parties was at 12% while EEE Corporation’s…
