Q3 Leasehold ImprovementsTop Inc. leases a building. The lease is for 10 years with two five year options to renew. If Top Inc exercises bothoptions they will be in the building for 20 years. In Year 1, the Top Inc. spends $210,000 on leasehold improvements.At the beginning of Year 2, additional improvements of $105,000 are made.What is the CCA deduction for year 1, year 2 and year 3YearBeginning UCC$1Add: LeaseholdImprovements Year 1$Less Year 1 CCA$$Year2Year3Ending UCC balanceyear 1Add: LeaseholdImprovements Year 2Less Year 2 CCAEnding UCC balance.year 2Less Year 3 CCAUCC ending balance$$$$210,000(21,000)189,000$(14,000) $175,000 $(21,000) $154,000 $vw105,000(22,500) X82,500X(36,500) X46,000 X$(21,000)$(36,500)$(57,500)

Tenant PaysIf the tenant pays for the improvement, they will capitalize the improvement and…

Answered: op Inc. leases a building.

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op Inc. leases a building.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Question

Q3 Leasehold Improvements
Top Inc. leases a building. The lease is for 10 years with two five year options to renew. If Top Inc exercises both
options they will be in the building for 20 years. In Year 1, the Top Inc. spends $210,000 on leasehold improvements.
At the beginning of Year 2, additional improvements of $105,000 are made.
What is the CCA deduction for year 1, year 2 and year 3
Year
Beginning UCC
$
1
Add: Leasehold
Improvements Year 1
$
Less Year 1 CCA
$
$
Year
2
Year
3
Ending UCC balance
year 1
Add: Leasehold
Improvements Year 2
Less Year 2 CCA
Ending UCC balance.
year 2
Less Year 3 CCA
UCC ending balance
$
$
$
$
210,000
(21,000)
189,000
$
(14,000) $
175,000 $
(21,000) $
154,000 $
vw
105,000
(22,500) X
82,500X
(36,500) X
46,000 X
$
(21,000)
$
(36,500)
$
(57,500)

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