discuss whether casinos prepaid rent is considered a revenue expense or a capital expense
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Q: discuss whether casinos prepaid rent is considered a revenue expense or a capital expense.
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John has applied and been approved a license to operate a casino in Melbourne, which later on he
named it The Casino East. John has received 10-year license from the Victorian Government to operate
the casino. He also received approval for Casino’s building for a long period of time (90 years).
John was instructed by the relevant Government agency to pay $180 million for the approved
casino’s license and $80 million as prepaid rent covering the first 10 years of casino’s rental. John
has negotiated to pay $400,000 rental per year for the remaining 80 years of the lease.
With reference to relevant legislation and case law discuss whether casinos prepaid rent is
considered a revenue expense or a capital expense
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- John has applied and been approved a licence to operate a casino in Melbourne, which later on he named it The Casino East. John has received 10-year licence from Victorian Government to operate the casino. He also received approval for Casino’s building for a long period of time (90 years). John was instructed by the relevant Government agency to pay $180 million for the approved casino’s licence and $80 million as prepaid rent covering the first 10 years of casino’s rental. John has negotiated to pay $400,000 rental per year for the remaining 80 years of the lease. With reference to relevant legislation and case law discuss whether casinos prepaid rent is considered a revenue expense or a capital expense. (Answer should be based on australian law)John has applied and been approved a license to operate a casino in Melbourne, which later on henamed it The Casino East. John has received 10-year licence from Victorian Government to operatethe casino. He also received approval for Casino’s building for a long period of time (90 years).John was instructed by the relevant Government agency to pay $180 million for the approvedcasino’s license and $80 million as prepaid rent covering the first 10 years of casino’s rental. Johnhas negotiated to pay $400,000 rental per year for the remaining 80 years of the lease.With reference to relevant legislation and case law discuss whether casinos prepaid rent isconsidered a revenue expense or a capital expense.Dr. Superhook, a private towing contractor, has an opportunity for a towing contract with the city over the next 5 years. The contract calls for the city to pay Dr. Superhook $4,000,000 at the start of the contract and nothing for the remainder of the contract. Dr. Superhook estimates that its expenses will be $1,200,000 at the end of each of the 5 years If Dr. Superhook uses IRR to evaluate its opportunities, under what values of the discount rate would the company accept the contract? Briefly explain why.
- Henrietta, the owner of a very successful hotel chain in the Southeast, is exploring the possibility of expanding the chain into a city in the Northeast. She incurs $60,000 of expenses associated with this investigation. Based on the regulatory environment for hotels in the city, she decides not to expand. During the year, she also investigates opening a restaurant that will be part of a national restaurant chain. Her expenses for this are $54,400. She proceeds with opening the restaurant, and it begins operations on May 1. Determine the amount that Henrietta can deduct in the current year for investigating these two businesses. In your computations, round the per-month amount to the nearest dollar and use rounded amount in subsequent computations. a. The deductible amount of investigation expenses related to expansion of her hotel chain into another city? b. The deductible amount of investigation expenses related to opening a restaurant?On January 1, 2025, Nancy White signed an agreement, covering 5 years, to operate as a franchisee of Blossom Inc. for an initial franchise fee of $41,000. The amount of $12,000 was paid when the agreement was signed, and the balance is payable in five annual payments of $5,800 each, beginning January 1, 2026. The agreement provides that the down payment is nonrefundable and that no future services are required of the franchisor once the franchise commences operations on April 1, 2025. Nancy White's credit rating indicates that she can borrow money at 9% for a loan of this type. Click here to view the factor table. (a) Your answer is partially correct. -- 4 Prepare journal entries for Blossom for 2025-related revenue for this franchise arrangement. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.Khali owns two commercial buildings in downtown Sheridan. XYZ Company expressed an interest in one of the properties. They would like to rent the building for five years. Anxious to close the deal, Khali tells XYZ Company he will provide a significant discount on the first two years of rent, if XYZ Company pays in advance. XYZ Company agrees. On November 15, Khali receives XYZ’s security deposit in the amount of $2,500 that is refundable at the end of the lease period. A check in the amount of $30,000, covering the first two years of rent arrives on December 1, 2022. How much rental income must Khali include on his 2022 tax return?
- Your client, Portsmouth Mining, recently entered into an agreement to obtain the rights to operate a coal mine in Virginia for $15 million. Portsmouth incurred development costs of $6 million in preparing the mine for extraction, which began on Jul 1, 2021. The contract requires Portsmouth to restore the land and surrounding area to its original condition after extraction is complete in three years. The company controller, Anna Dickson, is not sure how to account for the restoration costs and has asked your advice. Anna is aware of an accounting standard addressing this issue, but is not sure of its provisions. She has narrowed down the possible cash outflows for the restoration costs to four possibilities. Cash Outflow Probability $ 3 million 20% $ 4 million 30% $ 5 million 25%…Harold owns a construction company that subcontracts to international power equipment corporations such as GE, ABB, Siemens, and LG. For the last 4 years he has leased crane and lifting equipment for $32,000 annually. He now wishes to purchase similar equipment. Use an MARR of 12% per year to determine if any of the options detailed as shown are financially justified.In January, Prahbu purchased for $100,000 a new machine for use in an existing production line of his manufacturing business. Assume that the machine is a unit of property and is not a material or supply. Prahbu pays $4,075 to install the machine, and after the machine is installed, he pays $2,350 to perform a critical test on the machine to ensure that it will operate in accordance with quality standards. On November 1, the critical test is complete, and Prahbu places the machine in service on the production line. On December 3, Prahbu pays another $5,400 to perform periodic quality control testing after the machine is placed in service. How much will Prahbu be required to capitalize as the cost of the machine?