The JJ Stores Company owns and operates a chain of 500 convenience stores. Budgeted data for the KK Store are as followAnnual salesP 10,550,000Annual costs of goods sold and other operating expenses8,500,000Annual depreciation of building (not included above)600,000KK can lease the building to a large dry goods store for P120,000 per month.What is the advantage (disadvantage) of renting out the building? |

Annual sales P10550000 Less Expenses Annual cost of goods sold and other operating expenses…

Answered: advantage (disadvantage) of renting out…

Business

Accounting

advantage (disadvantage) of renting out the building?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: what is One of the advantages of leasing

A: A lease can be defined as a contract where a party, being the owner (lessor) of an asset (leased…

Q: Explain Leasing Commissions and Related Costs?

A: Answer: Leasing commissions: Leasing commission is nothing but fees or premium paid in the form of…

Q: What will be the Return from Owning versus Leasing explain with example?

A: Return from owning an asset: The first benefit of owning an asset is that individuals can use an…

Q: leasing

A: Introduction: Leasing is defined as an agreement between two parties known as lessor & lessee…

Q: Explain Multifamily Housing Markets?

A: Multifamily housing market This market is a segment of the market of real estate as it is a housing…

Q: Discusses various alternative real estate financing and investment vehicles?

A: Note this is exclusive question we can’t count or limit number of strategy. I will try to explain…

Q: What is the significance of the passive activity loss limitation (PAL) rules for real estate…

A: Significance of the passive activity loss limitation (PAL) rule for real estate investors: The…

Q: Are there advantages of leasing its equipment that HG should consider?

Q: What is correct about rent control? Question 4 options: It often hurts those it tries to…

A: Rent control can be defined as the process which puts ceiling on the maximum limit of rent offered…

Q: D4) What is absorption? What is positive absorption? What is negative absorption? When evaluating…

A: Here discuss about the details of the absorption which are related with the real estate property…

Q: What are the features of Rent discount for industrial/warehouse properties that might be added for…

A: The question is based on the concept of rent discounting for real estate.

Q: Define the term net advantage to leasing (NAL).

A: NAL It is the money that an entity or an individual saves from taking an asset on lease instead of…

Q: Is leasing good for individuals? Why or Why not?

A: The answer for the theory question on leasing is discussed hereunder : A lease is a contractual…

Q: How can the marginal rate of return be used to decide when to sell a property?

A: Answer: The following are the factors that cause a change in marginal rate of return over time, An…

Q: Which are the effects of Tenant Improvements and Free Rents on FFO?

A: FFO stands for Funds From Operations. The amount that is derived and used by real estate investment…

Q: What is the motivation for a sale-leaseback of the land?

A: Lease is the agreement between the two parties that is lesser and lessee where lesser allows the…

Q: What are the features of Rent premiums for industrial/warehouse properties that might be added for…

A: Introduction: The given question is based on the notion of rent discounting in real estate finance.…

Q: What incentive dose company have to allocate more of a group purchase price to land than to building

A: The incentive that will have to the company which has to allocate more of a group purchase price…

Q: What are two advantages and two disadvantages of renting over purchasing equipment?

A: Renting over purchasing equipment: Purchase of equipment is treated as a capital expenditure which…

Q: What is meant by “loss to lease”? Explain?

A: Loss to lease: It is the term used in Real Estate in leasing of property mainly apartment complexes,…

Q: Explain Effective Cost of the Sale-Leaseback?

A: Sales leaseback is a type of financial transaction where the owner sold its property to the other…

Q: Disadvantages of home ownership include (A) O restricted mobility. (B) Ogreater responsibility. (C)…

A: The structured management of one's finances, including the precise balancing of long-term planning,…

Q: What are the general desirability among users to lease rather than own the space they need in their…

A: Leasing is a method through which person can hire fixed asset or place for certain period of time by…

Q: What are the key advantages and disadvantages of leasing?

A: Leasing:Leasing is a contractual agreement between the lessor and lessee for hiring of a particular…

Q: Insurance value differs from market value in that? a) the value is only attributed to the…

A: Market value It is a price at which the asset will fetch in the market/ investment value community…

Question

The JJ Stores Company owns and operates a chain of 500 convenience stores. Budgeted data for the KK Store are as follow
Annual sales
P 10,550,000
Annual costs of goods sold and other operating expenses
8,500,000
Annual depreciation of building (not included above)
600,000
KK can lease the building to a large dry goods store for P120,000 per month.
What is the advantage (disadvantage) of renting out the building? |

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Calculation of existing annual income or loss

VIEW

Calculation of annual income from lease

VIEW

Net decrease in income

VIEW

Answer

VIEW

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

How does Leasing offer flexibility and a lower cost when disposing of the asset?
Which are the other Approaches to Investing in Distressed Properties?
How can I own commercial property without having to manage the building and tenants?
Which of these is not typically a responsibility of a property manager? O Maintenance programs Marketing and leasing O Tenant relations O Income tax analysis
Describe some economic factors that might provide an advantageto leasing.
From an economic point of view, which activity is regarded as an undertaking to prevent a loss in value, rather than an activity undertaken to add value to the property? maintenance O modernization O rehabilitation O remodeling
Explain Friendly Foreclosure?
Which best defines Market Value? Group of answer choices: Whatever the market will bear. Most probable selling price, assuming “normal” sale conditions What an investor is willing to pay for a property. The appraised value.