Miriam Corp. began leasing retail space at Oberlin Village in Raleigh, NC, on December 1, 2022. Before opening its new store, Miriam spent $7,000 on special lighting for the store. The lease term is ten (10) years, and the special lighting has an economic life of five (5) years.Which statement shows the correct accounting treatment for the new lighting in 2022?Miriam should debit its “Leasehold Improvements” account for $7,000 and depreciate the lighting over the lease term of ten (10) years.Miriam should debit its “Repairs and Maintenance Expense” account by $7,000.Miriam should debit its “Cost of Goods Sold” account by $7,000.Miriam should debit its “Leasehold Improvements” account for $7,000 but should not depreciate the lighting.Miriam should debit its “Leasehold Improvements” account for $7,000 and depreciate the lighting over its economic life of five (5) years.

Attributable costs (not in nature of minor repairs) to the assets are capitalised to asset account…

Answered: Miriam Corp. began leasing retail space…

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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Miriam Corp. began leasing retail space at Oberlin Village in Raleigh, NC, on December 1, 2022. Before opening its new store, Miriam spent $7,000 on special lighting for the store. The lease term is ten (10) years, and the special lighting has an economic life of five (5) years.

Which statement shows the correct accounting treatment for the new lighting in 2022?

Miriam should debit its “Leasehold Improvements” account for $7,000 and depreciate the lighting over the lease term of ten (10) years.
Miriam should debit its “Repairs and Maintenance Expense” account by $7,000.
Miriam should debit its “Cost of Goods Sold” account by $7,000.
Miriam should debit its “Leasehold Improvements” account for $7,000 but should not depreciate the lighting.
Miriam should debit its “Leasehold Improvements” account for $7,000 and depreciate the lighting over its economic life of five (5) years.

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