On June 1, 2021 Maroon Company entered into a 5-year nonrenewable lease, commencing on that date, for office space and made the following collections from the lessee: • Bonus to obtain lease, P300,000 • First month's rent, P100,000 • Last month's rent, P100,000 In its income statement for the year ended June 30, 2021, what amount should Maroon report as rent income?

On June 1, 2021 Maroon Company entered into a 5-year nonrenewable lease, commencing on that date, for office space and made the following collections from the lessee: • Bonus to obtain lease, P300,000 • First month's rent, P100,000 • Last month's rent, P100,000 In its income statement for the year ended June 30, 2021, what amount should Maroon report as rent income?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Windsor Leasing Company signs an agreement on January 1, 2020, to lease equipment to Cole Company.…

A: Journal entries should not be used to record routine transactions such as customer charges and…

Q: On September 30, 2024, Truckee Garbage leased equipment from a supplier and agreed to pay $125,000…

A: Introduction:Lease is an arrangement wherein, owner of the asset (lessor) allows the use of the…

Q: On January 1, 2023, Murray Manufacturing leased a building for use in its operations from Associated…

A: The objective of the question is to calculate the right-of-use asset and lease liability for Murray…

Q: On January 1, 2021, Sheridan, Inc. signs a 10-year noncancelable lease agreement to lease a storage…

A: A lease payment is the monthly equivalent of rent that is specifically defined in a contract between…

Q: Manufacturers Southern leased high-tech electronic equipment from International Machines on January…

A: Calculation of lease payments and recording of journal entry are as follows

Q: On January 1, 2024, Winn Heat Transfer leased office space under a three-year operating lease…

A: Lease is a an agreement in which usually two parties are involved one is lessor and other is the…

Q: On January 1, 2023, Murray Manufacturing leased a building for use in its operations from Associated…

A: The objective of this question is to determine the amount of the $17,000 lease payment that is used…

Q: Edom Company, the lessor, enters into a lease with Davis Company to lease equipment to Davis…

A: Annual rental receipts = $100,000 Lease term = 5 years Interest rate implicit in the lease = 14%

Q: Mando Co. leased a piece of nonspecialized equipment for use in its operations from Empire Leasing…

A: Leasing of Assets :— it means giving assets to other on rent. Leasing Assets means, with respect to…

Q: 1-4. Prepare the appropriate entries for Harlon Consulting on January 1, 2024, December 31, 2024,…

A: Lease is defined as a contractual agreement incorporated between two business entities where one…

Q: Ava Company leased office premises to Olivia, Inc. for a two-year term beginning March 1, 2021 up to…

A: Companies sometimes do not own the property but get the same property on lease for a definite period…

Q: On January 1, 2021, the lessee company signed an operating lease to lease a building from the…

A: Lease:- Lease is an arrangement by which lessor gives the right to use an asset for given period of…

Q: specified three annual lease payments of $93,000 each, beginning December 31, 2024, and on each…

A: Lease is a an agreement in which usually two parties are involved one is lessor and other is the…

Q: On January 1, 2024, Winn Heat Transfer leased office space under a three-year operating lease…

A: Lease is a an agreement in which usually two parties are involved one is lessor and other is the…

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 June 1, 2021 Maroon Company entered into a 5-year nonrenewable
lease, commencing on that date, for office space and made the
following collections from the lessee:
• Bonus to obtain lease, P300,000
First month's rent, P100,000
• Last month's rent, P100,000
In its income statement for the year ended June 30, 2021, what amount
should Maroon report as rent income?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

On April 1, 2021, Primer Corp. signs a five-year lease to use office space. The present value of the monthly lease payments is $100,000. Record the lease.
On January 1, 2021, Winn Heat Transfer leased office space under a three-year operating lease agreement. The arrangement specified three annual lease payments of $80,000 each, beginning December 31, 2021, and at each December 31 through 2023. The lessor, HVAC Leasing calculates lease payments based on an annual interest rate of 5%. Winn also paid a $100,000 advance payment at the beginning of the lease in addition to the first $80,000 lease payment. With permission of the owner, Winn made structural modifications to the building before occupying the space at a cost of $180,000. The useful life of the building and the structural modifications were estimated to be 30 years with no residual value.Required:Prepare the appropriate entries for Winn Heat Transfer from the beginning of the lease through the end of 2023. Winn’s fiscal year is the calendar year.
On January 1, 2023, Murray Manufacturing leased a building for use in its operations from Associated Realty. The 7-year, noncancellable lease requires annual lease payments of $22,000, beginning January 1, 2023, and at each December 31 thereafter through 2028.The lease payment includes costs related to property taxes of $2000. They also include payments for common area maintenance. The observable standalone price for the lease (including the property taxes) is $20,000 and the observable standalone price for the common area maintenance is $4000.In addition, Murray agrees to pay insurance on the building. Murray pays the insurance each year when it receives an invoice from Associated Realty for the insurance amount. On December 15, 2023, Murray was billed and paid $2500 for this insurance. Murray does not make the election to account for each separate lease component, along with its associated nonlease components, as a single lease component.The lease agreement does not transfer…
Gg.78.
On January 1, 2024, Winn Heat Transfer leased office space under a three-year operating lease agreement. The arrangement specified three annual lease payments of $ 60,000 each, beginning December 31, 2024, and on each December 31 through 2026. The lessor, HVAC Leasing, calculates lease payments based on an annual interest rate of 5%. Winn also paid a $276,000 advance payment at the beginning of the lease. With permission of the owner, Winn made structural modifications to the building before occupying the space at a cost of $336,000. The useful life of the building and the structural modifications were estimated to be 30 years with no residual value. 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: Prepare the appropriate entries for Winn Heat Transfer from the beginning of the lease through the end of 2026. Winn's fiscal year is the calendar year. Note: If no entry is required for a transaction/event,…
On January 1, 2024, Winn Heat Transfer leased office space under a three-year operating lease agreement. The arrangement specified three annual lease payments of $96,000 each, beginning December 31, 2024, and on each December 31 through 2026. The lessor, HVAC Leasing, calculates lease payments based on an annual interest rate of 5%. Winn also paid a $321,000 advance payment at the beginning of the lease. With permission of the owner, Winn made structural modifications to the building before occupying the space at a cost of $417,000. The useful life of the building and the structural modifications were estimated to be 30 years with no residual value. 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: Prepare the appropriate entries for Winn Heat Transfer from the beginning of the lease through the end of 2026. Winn's fiscal year is the calendar year. Note: If no entry is required for a transaction/event,…
19 On September 30, 2024, Truckee Garbage leased equipment from a supplier and agreed to pay $125,000 annually for 15 years beginning September 30, 2025. Generally accepted accounting principles require that a liability be recorded for this lease agreement for the present value of scheduled payments. Accordingly, at inception of the lease, Truckee recorded a $1,214,031 lease liability. Determine the interest rate implicit in the lease agreement. 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)
On January 1, 2024, Winn Heat Transfer leased office space under a three-year operating lease agreement. The arrangement specified three annual lease payments of $60,000 each, beginning December 31, 2024, and on each December 31 through 2026. The lessor, HVAC Leasing, calculates lease payments based on an annual interest rate of 8%. Winn also paid a $120,000 advance payment at the beginning of the lease. With permission of the owner, Winn made structural modifications to the building before occupying the space at a cost of $180,000. The useful life of the building and the structural modifications were estimated to be 30 years with no residual value. 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: Prepare the appropriate entries for Winn Heat Transfer from the beginning of the lease through the end of 2026. Winn's fiscal year is the calendar year. Note: If no entry is required for a transaction/event,…
On January 1, 2021, Coronado Industries leased a building to Sandhill Co. for a ten-year term at an annual rental of $175000. At inception of the lease, Coronado received $701000 covering the first two years' rent of $350000 and a security deposit of $351000. This deposit will not be returned to Sandhill upon expiration of the lease but will be applied to payment of rent for the last two years of the lease. What portion of the $701000 should be shown as a current and long-term liability, respectively, in Coronado's December 31, 2021 balance sheet? Current Liability Long-term Liability $350000 $175000 $175000 $350000 $0 $701000 $350000 $351000
Help Save & Ex On September 30, 2024, Truckee Garbage leased equipment from a supplier and agreed to pay $140,000 annually for 15 years beginning September 30, 2025. Generally accepted accounting principles require that a liability be recorded for this lease agreement for the present value of scheduled payments. Accordingly, at inception of the lease, Truckee recorded a $1,405,261 lease liability. Required: Determine the interest rate implicit in the lease agreement. Note: Use tables, Excel, or a financial calculator. Round your answer to 1 decimal place. (FV of $1, PV of $1, EVA of $1, PVA of $1, EVAD of $1 and PVAD of $1) Interest rate implicit %