On January 1, 2016, Paete Company signed a 12-year lease for a building. Paete has an option to renew the lease for an additional 8-year period on or before January 1, 2020. During January 2018, Paete made substantial improvements to the building. The cost of the improvements was P3,600,000, with an estimated useful life of 15 years. At December 31, 2018, Paete intended to exercise the renewal option. Paete has taken a full year’s amortization on this improvement. What should be the depreciation charge for the year ended 31 December 2018?
On January 1, 2016, Paete Company signed a 12-year lease for a building. Paete has an option to renew the lease for an additional 8-year period on or before January 1, 2020. During January 2018, Paete made substantial improvements to the building. The cost of the improvements was P3,600,000, with an estimated useful life of 15 years. At December 31, 2018, Paete intended to exercise the renewal option. Paete has taken a full year’s amortization on this improvement. What should be the depreciation charge for the year ended 31 December 2018?
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
Chapter17: Advanced Issues In Revenue Recognition
Section: Chapter Questions
Problem 9MC
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On January 1, 2016, Paete Company signed a 12-year lease for a building. Paete has an option to renew the lease for
an additional 8-year period on or before January 1, 2020. During January 2018, Paete made substantial improvements to
the building. The cost of the improvements was P3,600,000, with an estimated useful life of 15 years. At December 31,
2018, Paete intended to exercise the renewal option. Paete has taken a full year’s amortization on this improvement.
What should be the
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