On January 1, 2018, Claude paid the annual rental for 2018 and 2019 including the security deposit (non-refundable). In addition to annual rental and real property taxes, part of the lease was for Claude to improve the facility. The improvement was completed on January 1, 2020. Details of the improvements were as follows: Cost of leasehold improvement - 6,000,000 Estimated useful life of improvement - 15 years

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 2E: Lessee Accounting with Payments Made at Beginning of Year Adden Company signs a lease agreement...
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Question 4
16 pts
Claude leased a facility from ML partnership in January 1, 2018.
Terms of the lease were as follows:
Annual rental
Annual real property tax assumed and paid by Claude 50,00
Security deposit
Lease term
300,000
200,000
|12 years
On January 1, 2018, Claude paid the annual rental for 2018 and
2019 including the security deposit (non-refundable). In addition to
annual rental and real property taxes, part of the lease was for
Claude to improve the facility. The improvement was completed on
January 1, 2020. Details of the improvements were as follows:
Cost of leasehold improvement - 6,000,000
Estimated useful life of improvement - 15 years
Determine the income to be reported by ML partnership in 2020
assuming the company opted to report income from improvement
using the spread-out method.
Transcribed Image Text:Question 4 16 pts Claude leased a facility from ML partnership in January 1, 2018. Terms of the lease were as follows: Annual rental Annual real property tax assumed and paid by Claude 50,00 Security deposit Lease term 300,000 200,000 |12 years On January 1, 2018, Claude paid the annual rental for 2018 and 2019 including the security deposit (non-refundable). In addition to annual rental and real property taxes, part of the lease was for Claude to improve the facility. The improvement was completed on January 1, 2020. Details of the improvements were as follows: Cost of leasehold improvement - 6,000,000 Estimated useful life of improvement - 15 years Determine the income to be reported by ML partnership in 2020 assuming the company opted to report income from improvement using the spread-out method.
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