Ground Company leased a parcel of land to Sparks Company for six years. The lease agreement states that the Sparks will pay rental of P200,000 on the first year, to be increased by P10,000 annually. There is also a provision that Ground is to receive a lease bonus of P30,000 and a security deposit of P60,000, refundable at the end of the lease contract. How much is the rent expense of Sparks Company on the first year? How much is the rent income of Ground Company on the second year?
Ground Company leased a parcel of land to Sparks Company for six years. The lease agreement states that the Sparks will pay rental of P200,000 on the first year, to be increased by P10,000 annually. There is also a provision that Ground is to receive a lease bonus of P30,000 and a security deposit of P60,000, refundable at the end of the lease contract. How much is the rent expense of Sparks Company on the first year? How much is the rent income of Ground Company on the second year?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Ground Company leased a parcel of land to Sparks Company for six years. The lease agreement states that the
Sparks will pay rental of P200,000 on the first year, to be increased by P10,000 annually. There is also a provision that Ground is to receive a lease bonus of P30,000 and a security deposit of P60,000, refundable at
the end of the lease contract.
- How much is the rent expense of Sparks Company on the first year?
- How much is the rent income of Ground Company on the second year?
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