NEW Co. leased an office and paid $20,000 for leasehold improvements in January of this year. This cost included drywall, new carpets, and all new lighting fixtures. The term of the lease is 2 years plus an option to renew for 2 more years. Required: Calculate the maximum CCA that NEW Co. will be allowed to deduct this year. (Show calculations and the process of arriving at your answer.)
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- Blossom, Inc. has entered an agreement to lease an old warehouse with a useful life of 5 years and a fair value of $25,000 from Crane Corporation. The agreement stipulates the following. Rental payments of $5,599 are to be made at the start of each year of the 5-year lease. No residual value is expected at the end of the lease. Blossom must reimburse Crane each year for any real estate taxes incurred for the year. Last year, the cost of real estate taxes was $700, though these costs vary from year to year. Blossom must make a payment of $500 with the rental payment each period to cover the insurance Crane has on the warehouse. Blossom paid legal fees of $1,000 in executing the lease. Assuming Blossom's incremental borrowing rate is 6% and the rate implicit in the lease is unknown, prepare the journal entry to record the initial lease liability and right-of-use asset for Blossom. (List all debit entries before credit entries. Credit account titles are automatically indented when the…Megan Appliances leased an office space from Cindy Real Estate, Inc on July 1, 2020. The lease contract is 8 years. The rental payment of P600,000 is payable in advance, every July 1 starting July 1, 2020. Implicit rate is 10%. Cindy Real Estate is a dealer of office space and makes a profit through its leasing business. The carrying value of the office space on Cindy’s records is 2,800,000. Megan guaranteed the residual value of P100,000 upon its return of the asset to Cindy. Relevant PV factors are shown below:· PV of annuity due for 8 periods at 10%: 5.87· PV of ordinary annuity for 8 periods at 10%: 5.33· PV of 1 for 8 periods at 10%: 0.47How much is the dealer’s profit to be recognized by Cindy on commencement date? a. 769,000 b. 2,753,000 c. 3,569,000 d. None – this is a direct finance leaseWindsor, Inc. has entered an agreement to lease an old warehouse with a useful life of 5 years and a fair value of $41,000 from United Corporation. The agreement stipulates the following. . Rental payments of $9,994 are to be made at the start of each year of the 5-year lease. No residual value is expected at the end of the lease. Windsor must reimburse United each year for any real estate taxes incurred for the year. Last year, the cost of real estate taxes was $800, though these costs vary from year to year. Windsor must make a payment of $500 with the rental payment each period to cover the insurance United has on the warehouse. Windsor paid legal fees of $2,500 in executing the lease. Assuming Windsor's incremental borrowing rate is 11% and the rate implicit in the lease is unknown, prepare the journal entry to record the initial lease liability and right-of-use asset for Windsor.
- I MISS HIGH SCHOOL INC. leased a machine from ANYARE SA COLLEGE LTD. on January 01, 2019. The first annual payment was made on January 01, 2020. The machine has an economic life of six years. The lease agreement requires four annual payments of P33,000, including P3,000 annual payment for repairs and maintenance. At the end of the lease term, the machine will be returned to ANYARE SA COLLEGE LTD. A residual value in the amount of P5,000 has been guaranteed by I MISS HIGH SCHOOL INC. Interest implicit in the lease is 10% which is known to I MISS HIGH SCHOOL INC. For the year ended December 31, 2020, what would I MISS HIGH SCHOOL INC. record in relation to the lease? Round present value factors to five decimal places. a. An interest expense of P9,851. b. An interest expense of P0. c. An interest payable of P9,851. d. An interest payable of P7,836.I MISS HIGH SCHOOL INC. leased a machine from ANYARE SA COLLEGE LTD. on January 01, 2019. The first annual payment was made on January 01, 2020. The machine has an economic life of six years. The lease agreement requires four annual payments of P33,000, including P3,000 annual payment for repairs and maintenance. At the end of the lease term, the machine will be returned to ANYARE SA COLLEGE LTD. A residual value in the amount of P5,000 has been guaranteed by I MISS HIGH SCHOOL INC. Interest implicit in the lease is 10% which is known to I MISS HIGH SCHOOL INC.Round present value factors to five decimal places. How much annual depreciation expense should I MISS HIGH SCHOOL INC. record? a. P24,628 b. P16,419 c. P23,378 d. P15,585Inc. currently leases an office building. It initiated the original 23-year lease 17 years ago, so 6 years remain on the lease. On January 1, PP paid $28,500 to install a new heating and cooling system with a 12-year estimated useful life that it expects to use ratably over the remaining term of the lease. What is the journal entry to record the expenditure? How much amortization will PP report and for how many years? What is the journal entry for the first year?
- Forrest, Inc. has entered an agreement to lease an old warehouse with a useful life of 5 years and a fair value of $20,000 from United Corporation. The agreement stipulates the following. Rental payments of $4,638 are to be made at the start of each year of the 5-year lease. No residual value is expected at the end of the lease. Forrest must reimburse United each year for any real estate taxes incurred for the year. Last year, the cost of real estate taxes was $700, though these costs vary from year to year. Forrest must make a payment of $500 with the rental payment each period to cover the insurance United has on the warehouse. Forrest paid legal fees of $1,000 in executing the lease. Assuming Forrest's incremental borrowing rate is 8% and the rate implicit in the lease is unknown, prepare the journal entry to record the initial lease liability and right-of-use asset for Forrest.On January 1, 2020 Venti Company rented out an apartment to Barbatos Company for an operatinglease term of 3 years. Any executory costs are responsibility of the Venti. The following items arerelevant to the lease:Annual rental payments 250,000Maintenance & property taxes 30,000Security deposit 80,000Requirements:a. What are the journal entries in the books of the Barbatos in 2020?b. What are the journal entries in the books of the Venti in 2020?A property owner is evaluating the following alternatives for leasing space in his office building for the next five years: Gross lease. Rent will be $34 per square foot each year with the lessor responsible for payment of all operating expenses. Expenses are estimated to be $9 during the first year and increase by $1 per year thereafter. Calculate the effective rent to the owner (after expenses) for the lease using a 11 percent discount rate. (Click to select) (Click to select) $29.01 $18.57 $23.21 $22.05
- Jackie Company leased a parcel of land to Junnie Company for a lease term of 25 years starting January 1, 2018. Junnie immediately started to construct a building on the leased land which was finished and made available for use starting July 1, 2020. The ownership of the building will be transferred to Jackie Company after the end of the lease term. The monthly rentals on the land is P25,000. The total cost of the building is P2,700,000 and had a useful life of 40 years. 19.Assuming the use of the spread-out method, how much is the total taxable income of Jackie from the lease to be reported in 2020? 20.Assuming the use of the outright method, how much is the total taxable income of Jackie from the lease to be reported in 2020?On January 1, 2021, Veronica Company negotiated a 15-year lease for a building with useful life of 20 years. Before occupancy, the lessee incurred leasehold improvement of P600,000 with useful life 5 years. The lessee is required to restore the building upon expiration of the lease. The present value of estimated cost of restoration is P644,000 discounted at 7%. Annual payments of P1,000,000 are payable to the lessor on December 31 of each of the 15 years of the lease term. The lease was negotiated to assure the lessor a 10% rate of return. PV of an ordinary annuity of 1 at 10% for 15 periods PV of an annuity of 1 in advance at 10% for 15 periods 7.606 8.367 Required: Prepare journal entries on the books of Veronica Company for 2021.On January 1, Espinoza Moving and Storage leased a truck for a four-year period, at which time possession ofthe truck will revert back to the lessor. Annual lease payments are $10,000 due on December 31 of each year,calculated by the lessor using a 5% discount rate. If Espinoza’s revenues exceed a specified amount during thelease term, Espinoza will pay an additional $4,000 lease payment at the end of the lease. Espinoza estimates a60% probability of meeting the target revenue amount. What amount, if any, should be added to the right-of-useasset and lease liability under the contingent rent agreement?