On January 1, 2021, Maroon Company entered into a five-year nonrenewable operating lease, commencing on that date, for office space. The office space has a useful life of 50 years and the lease specifies a rent of P20,000 per month. The lessor grants nine months of free rent, how much is the rent income in 2021?

On January 1, 2021, Maroon Company entered into a five-year nonrenewable operating lease, commencing on that date, for office space. The office space has a useful life of 50 years and the lease specifies a rent of P20,000 per month. The lessor grants nine months of free rent, how much is the rent income in 2021?

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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Concept explainers

Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.

Question

On January 1, 2021, Maroon Company entered into a five-year
nonrenewable operating lease, commencing on that date, for office
space. The office space has a useful life of 50 years and the lease
specifies a rent of P20,000 per month. The lessor grants nine months of
free rent, how much is the rent income in 2021?

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