On July 1, 2020, Nami Company leased office premises for a three-year period at an annual rental of P 360,000 payable on July 1 each year. The first rent payment was made July 1, 2020. Additionally on July 1, 2020, Nami Company paid P 240,000 as a lease bonus to obtain a three-year lease instead of the lessor’s usual term of six years. On December 31, 2020, what amount should be reported as prepaid rent? Show your solution.
On July 1, 2020, Nami Company leased office premises for a three-year period at an annual rental of P 360,000 payable on July 1 each year. The first rent payment was made July 1, 2020. Additionally on July 1, 2020, Nami Company paid P 240,000 as a lease bonus to obtain a three-year lease instead of the lessor’s usual term of six years. On December 31, 2020, what amount should be reported as prepaid rent? Show your solution.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On July 1, 2020, Nami Company leased office premises for a three-year period at an annual rental of P 360,000 payable on July 1 each year. The first rent payment was made July 1, 2020. Additionally on July 1, 2020, Nami Company paid P 240,000 as a lease bonus to obtain a three-year lease instead of the lessor’s usual term of six years.
On December 31, 2020, what amount should be reported as prepaid rent? Show your solution.
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