Miriam Corp. began leasing retail space at Oberlin Village in Raleigh, NC, on December 1, 2022. Before opening its new store, Miriam spent $7,000 on special lighting for the store. The lease term is ten (10) years, and the special lighting has an economic life of five (5) years.Which statement shows the correct accounting treatment for the new lighting in 2022?Miriam should debit its “Leasehold Improvements” account for $7,000 and depreciate the lighting over the lease term of ten (10) years.Miriam should debit its “Repairs and Maintenance Expense” account by $7,000.Miriam should debit its “Cost of Goods Sold” account by $7,000.Miriam should debit its “Leasehold Improvements” account for $7,000 but should not depreciate the lighting.Miriam should debit its “Leasehold Improvements” account for $7,000 and depreciate the lighting over its economic life of five (5) years.

Attributable costs (not in nature of minor repairs) to the assets are capitalised to asset account…

Answered: Miriam Corp. began leasing retail space…

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 13P

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Miriam Corp. began leasing retail space at Oberlin Village in Raleigh, NC, on December 1, 2022. Before opening its new store, Miriam spent $7,000 on special lighting for the store. The lease term is ten (10) years, and the special lighting has an economic life of five (5) years.

Which statement shows the correct accounting treatment for the new lighting in 2022?

Miriam should debit its “Leasehold Improvements” account for $7,000 and depreciate the lighting over the lease term of ten (10) years.
Miriam should debit its “Repairs and Maintenance Expense” account by $7,000.
Miriam should debit its “Cost of Goods Sold” account by $7,000.
Miriam should debit its “Leasehold Improvements” account for $7,000 but should not depreciate the lighting.
Miriam should debit its “Leasehold Improvements” account for $7,000 and depreciate the lighting over its economic life of five (5) years.

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