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Case 4: Orange Company owns an office building and normally charges tenants P3,000 per square meter per year for the office space. Because the occupancy rate is low, Orange Company lease 100 sq. m to Comical. Company at P2,000 per square meter for the first two years of a four year operating lease. Rent for remaining years will be at the P3,000 rate. Comical Company moved into the building on January 1, 2019, and paid the first year's rent in advance. What amount of unearned rental revenue should Orange Company report in its balance sheet for the year ended September 30, 2019?

Case 4: Orange Company owns an office building and normally charges tenants P3,000 per square meter per year for the office space. Because the occupancy rate is low, Orange Company lease 100 sq. m to Comical. Company at P2,000 per square meter for the first two years of a four year operating lease. Rent for remaining years will be at the P3,000 rate. Comical Company moved into the building on January 1, 2019, and paid the first year's rent in advance. What amount of unearned rental revenue should Orange Company report in its balance sheet for the year ended September 30, 2019?

FINANCIAL ACCOUNTING
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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Case 3: On September 1, 2019, Trend Sound System Company leased office space at a monthly rental of P40,000 for 10 years expiring August 31, 2019. As an inducement for Trend to enter into lease, the lessor permitted Trend to occupy the premises rent-free from September 1 to November 30, 2019. Improvements were made at the leased office at a total costs of P300,000, the improvements were finished on September 30, 2019. It was estimated that the improvements will be useful for 5 years. For the year ended December 31, 2019, Trend should record total expense related to the lease facilities of? Case 4: Orange Company owns an office building and normally charges tenants P3,000 per square meter per year for the office space. Because the occupancy rate is low, Orange Company lease 100 sq. m to Comical. Company at P2,000 per square meter for the first two years of a four year operating lease. Rent for remaining years will be at the P3,000 rate. Comical Company moved into the building on January 1, 2019, and paid the first year's rent in advance. What amount of unearned rental revenue should Orange Company report in its balance sheet for the year ended September 30, 2019?
Transcribed Image Text:Case 3: On September 1, 2019, Trend Sound System Company leased office space at a monthly rental of P40,000 for 10 years expiring August 31, 2019. As an inducement for Trend to enter into lease, the lessor permitted Trend to occupy the premises rent-free from September 1 to November 30, 2019. Improvements were made at the leased office at a total costs of P300,000, the improvements were finished on September 30, 2019. It was estimated that the improvements will be useful for 5 years. For the year ended December 31, 2019, Trend should record total expense related to the lease facilities of? Case 4: Orange Company owns an office building and normally charges tenants P3,000 per square meter per year for the office space. Because the occupancy rate is low, Orange Company lease 100 sq. m to Comical. Company at P2,000 per square meter for the first two years of a four year operating lease. Rent for remaining years will be at the P3,000 rate. Comical Company moved into the building on January 1, 2019, and paid the first year's rent in advance. What amount of unearned rental revenue should Orange Company report in its balance sheet for the year ended September 30, 2019?
Case 1: On January 2, 2019, Nature Company entered into a ten-year non-cancelable lease requiring year end payments of P200,000. Nature's incremental borrowing rate is 12%, while the lessor's implicit interest rate, known to Nature Company, is 10%. There is no bargain purchase option. The leased property has an estimated economic life of 12 years. What amount should Nature capitalize for this leased property on January 2, 2019?
Transcribed Image Text:Case 1: On January 2, 2019, Nature Company entered into a ten-year non-cancelable lease requiring year end payments of P200,000. Nature's incremental borrowing rate is 12%, while the lessor's implicit interest rate, known to Nature Company, is 10%. There is no bargain purchase option. The leased property has an estimated economic life of 12 years. What amount should Nature capitalize for this leased property on January 2, 2019?
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