leasehold improvement?warehouse space. The entity had an option to renew the leaseDuring January 2021, the entity made substantial improvementOn January 1, 2019, Averse Company signed a 12-year lease foron this leasehold improvement for 2021.On December 31, 2021, the entity intended to exercise therenewal option. The entity had taken a full year depreciationto the warehouse. The cost of the improvement was P540,000with an estimated useful life of 15 years.On December 31, 2021, w hat is the carrying amount of theWarehouse space. The entity had an option to renew the leaseor an additional 8-year period on or before January 1, 2022.i this leasehold improvement for 2021.a.486,000b.504,000. 510,000d.513,000

SOLUTION- THE LIFE THE LEASEHOLD IMPROVEMENT IS THE SHORTER OF THE USEFUL LIFE OF EITHER THE…

During January 2021, the entity made substantial improvement warehouse space. The entity had an option to renew the lease renewal option. The entity had taken a full year depreciation On December 31, 2021, the entity intended to exercise the leasehold improvement? On December 31, 2021, what is the carrying amount of the On January 1, 2019, Averse Company signed a 12-year lease for Or an additional 8-year period on or before January 1, 2022. During January 2021, the entity made substantial improvement for to the warehouse. The cost of the improvement was P540,000 an estimated useful life of 15 years. with renewal option. The entity had taken a full year depreciation i this leasehold improvement for 2021. a. 486,000 b. 504,000 C. 510,000 d. 513,000

During January 2021, the entity made substantial improvement warehouse space. The entity had an option to renew the lease renewal option. The entity had taken a full year depreciation On December 31, 2021, the entity intended to exercise the leasehold improvement? On December 31, 2021, what is the carrying amount of the On January 1, 2019, Averse Company signed a 12-year lease for Or an additional 8-year period on or before January 1, 2022. During January 2021, the entity made substantial improvement for to the warehouse. The cost of the improvement was P540,000 an estimated useful life of 15 years. with renewal option. The entity had taken a full year depreciation i this leasehold improvement for 2021. a. 486,000 b. 504,000 C. 510,000 d. 513,000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 11E: On May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated...

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Determining Type of Lease and Subsequent Accounting On January 1, 2019, Caswell Company signs a 10-year cancelable (at the option of either party) agreement to lease a storage building from Wake Company. The following information pertains to this lease agreement: 1. The agreement requires rental payments of 100,000 at the beginning of each year. 2. The cost and fair value of the building on January 1, 2019, is 2 million. The storage building has not been specialized for Caswell. 3. The building has an estimated economic life of 50 years, with no residual value. Caswell depreciates similar buildings according to the straight-line method. 4. The lease does not contain a renewable option clause. At the termination of the lease, the building reverts to the lessor. 5. Caswells incremental borrowing rate is 14% per year. Wake set the annual rental to ensure a 16% rate of return (the loss in service value anticipated for the term of the lease). Caswell knows the implicit interest rate. 6. Executory costs of 7,000 annually, related to taxes on the property, are paid by Caswell directly to the taxing authority on Dec. 31 of each year. Required: 1. Determine what type of lease this is for the lessee. 2. Prepare appropriate journal entries on the lessees books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2019 and 2020.
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