On January 1,2019, Glen Company leased a building to Mix Company for 10-year term at an annual rental of P500,000. At inception of the lease, Glen received P2,000,000 covering the first two years rent of P1,000,000 and a security deposit of P1,000,000. This deposit will not be returned to Mix Company upon expiration of the lease but will be applied to payment of rent for the last two years of the lease. What amount should be reported as current and noncurrent liability in December 31, 2020 statement of financial position?  a. 0                     2,000,000 b. 500,000          1,000,000 c. 1,000,000        1,000,000 d. 1,000,000          500,000

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
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 6E: Lessor Accounting Issues Ramsey Company leases heavy equipment to Terrell Inc. on March 1, 2019, on...
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On January 1,2019, Glen Company leased a building to Mix Company for 10-year term at an annual rental of P500,000. At inception of the lease, Glen received P2,000,000 covering the first two years rent of P1,000,000 and a security deposit of P1,000,000.

This deposit will not be returned to Mix Company upon expiration of the lease but will be applied to payment of rent for the last two years of the lease.

What amount should be reported as current and noncurrent liability in December 31, 2020 statement of financial position

a. 0                     2,000,000
b. 500,000          1,000,000
c. 1,000,000        1,000,000
d. 1,000,000          500,000

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