XIII-37. On July 1, 2016, Madeline Company leased a small building and its site to Paris Company on a five-year contract. The lease provides for an advance rental payment of P10,000 which does not reduce any other payment, plus an annual rental payment of P40,000 payable each July 1 starting in 2016. The lease can be terminated at any year-end by the lessee with a six-month advance notice. There is no renewal agreement. On July 8, 2016, Paris Company spent P20,000 on internal changes and painting. Madeline's accounts showed the following data on January 1, 2016: initial cost of the building, P250,000 (accumulated depreciation, P60,000); estimated remaining life, 15 years; and estimated residual value, P10,000. The accounting period for each company ends December 31. The lease is an operating lease to both parties. Required: Give the amounts that each party should report on its 2016 and 2017 income statements and balance sheets.

XIII-37. On July 1, 2016, Madeline Company leased a small building and its site to Paris Company on a five-year contract. The lease provides for an advance rental payment of P10,000 which does not reduce any other payment, plus an annual rental payment of P40,000 payable each July 1 starting in 2016. The lease can be terminated at any year-end by the lessee with a six-month advance notice. There is no renewal agreement. On July 8, 2016, Paris Company spent P20,000 on internal changes and painting. Madeline's accounts showed the following data on January 1, 2016: initial cost of the building, P250,000 (accumulated depreciation, P60,000); estimated remaining life, 15 years; and estimated residual value, P10,000. The accounting period for each company ends December 31. The lease is an operating lease to both parties. Required: Give the amounts that each party should report on its 2016 and 2017 income statements and balance sheets.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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