NEW Co. leased an office and paid $20,000 forleasehold improvements in January of this year.This cost included drywall, new carpets, and allnew lighting fixtures. The term of the lease is 2years plus an option to renew for 2 more years.Required:Calculate the maximum CCA that NEW Co. will beallowed to deduct this year. (Show calculationsand the process of arriving at your answer.)

1. Determine the CCA class: Leasehold improvements fall under Class 13 for tax purposes in Canada.2.…

Answered: NEW Co. leased an office and paid…

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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Crestfield leases office space. On January 3, the company incurs $26,000 to improve the leased office space. These improvements are expected to yield benefits for 10 years. Crestfield has 5 years remaining on its lease. What journal entry would be needed to record the expense for the first year related to the improvements?
A property owner is evaluating the following alternatives for leasing space in his office building for the next five years: Gross lease. Rent will be $34 per square foot each year with the lessor responsible for payment of all operating expenses. Expenses are estimated to be $9 during the first year and increase by $1 per year thereafter. Calculate the effective rent to the owner (after expenses) for the lease using a 11 percent discount rate. (Click to select) (Click to select) $29.01 $18.57 $23.21 $22.05
Year 1, 2, 3, and 4 total expenses are $200,000, $210,000, $225,000, and $240,000, respectively. A tenant signs a lease at the start of the second year, occupies 35% of the rentable area and has base year stop for recoveries. What will the expense recovery for this tenant be in year 3?
A 1,000-square-foot office space is leased at $15.00 per square foot during the first year with $2.00 step-up provisions each of the following years. The lease is gross with an expense stop set at $6.65 per square foot, and yearly expenses per square foot are as follows: $6.00, $6.65, and $7.05. The lease provides for two months of free rent at the end of the lease term. If the lease term is three years and the discount rate is 10 percent, what is the effective rent per square foot?
Pharoah Company recently signed a lease for a new office building, for a lease period of 10 years. Under the lease agreement, a security deposit of $14,110 is made, with the deposit to be returned at the expiration of the lease, with interest compounded at 5% per year.
Carlton is the office manager for Cargill Limited. He just signed a 4-year leasing contract on some new production equipment. The terms of the lease require monthly payments of $9,000. If the current interest rates are 3.3% compounded semi-annually, what liability amount should be recorded on the company's balance sheet on the day the contract was signed? Round your answer to 2 decimal places.
Crestfield leases office space. On January 3, the company incurs $26,000 to improve the leased office space. These improvements are expected to yield benefits for 10 years. Crestfield has 5 years remaining on its lease. What journal entry would be needed to record the expense for the first year related to the improvements?
A property owner is evaluating the following alternatives for leasing space in his office building for the next five years: Net lease with CPI adjustments. The rent will be $16 per square foot the first year. After the first year, the rent will be increased by the amount of any increase in the CPI. The CPI is expected to increase 7 percent per year. Calculate the effective rent to the owner (after expenses) for the lease using a 10 percent discount rate.
On January 1, 2024, Rick's Pawn Shop leased a truck from Corey Motors for a six-year period with an option to extend the lease for three years. • Rick's had no significant economic incentive as of the beginning of the lease to exercise the three-year extension option. Annual lease payments are $30,000 due on December 31 of each year, calculated by the lessor using a 4% discount rate. The expected useful life of the asset is nine years, and its fair value is $225,000. • Assume that at the beginning of the third year, January 1, 2026, Rick's had made significant improvements to the truck whose cost could be recovered only if it exercises the extension option, creating an expectation that extension of the lease was "reasonably certain." • The relevant interest rate at that time was 5%. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: 1. Prepare the journal entry, if any, on January 1 and on December 31 of…
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A construction company recently purchased a crane with a 6-year warranty that covers maintenance and repairs. The company plans on using the crane for 15 years, and wants to set aside money now to pay for the repairs once the warranty expires. The repair costs are expected to average $13,500 a year at the 7th year and beyond, with a large overhaul cost of $20,000 in the 9th year of operation and another overhaul cost of $35,000 in the 12th year of operation. Assuming an interest rate of 4%, answer the following questions: How much money should the company set aside now to cover all the repair costs for the 15-year lifespan? ( Ans: $115,237.39, can someone explain how it got to this . please I need stepwise solution )
King Cones leased ice cream-making equipment from Ace Leasing. Ace earns interest under such arrangements at a 4% annual rate. The lease term is five-months with monthly payments of $13,500 due at the end of each month. King Cones elected the short-term lease option. What is the effect of the lease on King Cones' earnings during the five-month term (ignore taxes)? (Enter your answer as a positive value.)

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