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 spread-out 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 spread-out method.

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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