Claude leased a facility from ML partnership in January 1, 2018. Terms of the lease were as follows: 300,000 Annual real property tax assumed and paid by Claude 50,000 200,000 12 years Annual rental Security deposit Lease term 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
Claude leased a facility from ML partnership in January 1, 2018. Terms of the lease were as follows: 300,000 Annual real property tax assumed and paid by Claude 50,000 200,000 12 years Annual rental Security deposit Lease term 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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Determine the income to be reported by ML partnership in 2020 assuming the company opted to report income from improvement using lump sum method.
![Claude leased a facility from ML partnership in January 1, 2018. Terms of the lease
were as follows:
Annual rental
300,000
Annual real property tax assumed and paid by Claude 50,000
Security deposit
200,000
12 years
Lease term
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 lump-sum method.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0a382c13-40d3-4029-a878-4bb56aa81eb7%2Fa9963995-329a-446b-b98d-b59c60661ff2%2Fwp6vlqp_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Claude leased a facility from ML partnership in January 1, 2018. Terms of the lease
were as follows:
Annual rental
300,000
Annual real property tax assumed and paid by Claude 50,000
Security deposit
200,000
12 years
Lease term
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 lump-sum method.
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