15. On January 1, 2022, a company leased a land and building from an unrelated lessor for a 10- year term. The lease had a renewal option for an additional 5 years, but the entity has not reached a decision with regard to the renewal option. In early 2020, the entity completed three improvements to the property: Improvement 1 Improvement 2 Improvement 3 10 years 8 years 12 years P 940,000 1,500,000 360,000 What amount of depreciation of leasehold improvements will be reported in 2022? a. P199,228 b. P280,000 c. P311,500 d. P317,500

15. On January 1, 2022, a company leased a land and building from an unrelated lessor for a 10- year term. The lease had a renewal option for an additional 5 years, but the entity has not reached a decision with regard to the renewal option. In early 2020, the entity completed three improvements to the property: Improvement 1 Improvement 2 Improvement 3 10 years 8 years 12 years P 940,000 1,500,000 360,000 What amount of depreciation of leasehold improvements will be reported in 2022? a. P199,228 b. P280,000 c. P311,500 d. P317,500

Name: 15. On January 1, 2022, a company leased a land and building from an
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Description: 15. On January 1, 2022, a company leased a land and building from an unrelated lessor for a 10-year term. The lease had a renewal option for an additional 5 years, but the entity has notreached a decision with regard to the renewal option.In early 2

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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Concept explainers

Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.

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Question

15. On January 1, 2022, a company leased a land and building from an unrelated lessor for a 10-
year term. The lease had a renewal option for an additional 5 years, but the entity has not
reached a decision with regard to the renewal option.
In early 2020, the entity completed three improvements to the property:
Improvement 1
P 940,000
Improvement 2
1,500,000
360,000
Improvement 3
10 years
8 years
12 years
What amount of depreciation of leasehold improvements will be reported in 2022?
a. P199,228
b. P280,000
c. P311,500
d. P317,500

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