Homework Help is Here – Start Your Trial Now!
Business
Accounting
Problem 12-20 (AICPA Adapted) On January 1, 2022, Condor Company purchased a new machine for P3,600,000 and leased it to West Company the same day. The machine had an estimated useful life of 12 years and will be depreciated by the straight line method. The lease was for a three-year period expiring January 1, 2025 at an annual rental of P600,000. Additionally, West Company paid P450,000 to Condor Company as a lease bonus to obtain the three-year lease. During 2022, Condor Company paid insurance of P50,000 for the leased machine. What amount should be reported as net rental income for 2022? a. 700,000 b. 650,000 c. 400,000 d. 350,000

Problem 12-20 (AICPA Adapted) On January 1, 2022, Condor Company purchased a new machine for P3,600,000 and leased it to West Company the same day. The machine had an estimated useful life of 12 years and will be depreciated by the straight line method. The lease was for a three-year period expiring January 1, 2025 at an annual rental of P600,000. Additionally, West Company paid P450,000 to Condor Company as a lease bonus to obtain the three-year lease. During 2022, Condor Company paid insurance of P50,000 for the leased machine. What amount should be reported as net rental income for 2022? a. 700,000 b. 650,000 c. 400,000 d. 350,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

Please answer all the questions and subparts. Thank you.

Problem 12-20 (AICPA Adapted) On January 1, 2022, Condor Company purchased a new machine for P3,600,000 and leased it to West Company the same day. The machine had an estimated useful life of 12 years and will be depreciated by the straight line method. The lease was for a three-year period expiring January 1, 2025 at an annual rental of P600,000. C. d. Additionally, West Company paid P450,000 to Condor Company as a lease bonus to obtain the three-year lease. During 2022, Condor Company paid insurance of P50,000 for the leased machine. What amount should be reported as net rental income for 2022? a. 700,000 b. 650,000 c. 400,000 d. 350,000 Problem 12-21 (AICPA Adapted) On January 1, 2022, Highland Company owned a building held as investment property using the cost model. The carrying amount of the building was P9,000,000 with remaining useful life of 10-years. On April 1, 2022, the entity leased the building to a lessee for three years at monthly rental of P200,000. The leasee paid the rental for one year of P2,400,000 and P2,000,000 security deposit to be refunded upon expiration of the lease. On April 1, 2022, the lessee lease bonus. On April 1, 2022tionally paid P1,200,000 as a TEDDY the entity paid P600,000 to a broker as a finder fee. During 2022, Highland Company paid property tax of P200,000 and P50,000 insurance on the building. What amount should be reported as net rental income of the lessor? a. 1,400,000 b. 1,075,000 800,000 500,000 396
Transcribed Image Text:Problem 12-20 (AICPA Adapted) On January 1, 2022, Condor Company purchased a new machine for P3,600,000 and leased it to West Company the same day. The machine had an estimated useful life of 12 years and will be depreciated by the straight line method. The lease was for a three-year period expiring January 1, 2025 at an annual rental of P600,000. C. d. Additionally, West Company paid P450,000 to Condor Company as a lease bonus to obtain the three-year lease. During 2022, Condor Company paid insurance of P50,000 for the leased machine. What amount should be reported as net rental income for 2022? a. 700,000 b. 650,000 c. 400,000 d. 350,000 Problem 12-21 (AICPA Adapted) On January 1, 2022, Highland Company owned a building held as investment property using the cost model. The carrying amount of the building was P9,000,000 with remaining useful life of 10-years. On April 1, 2022, the entity leased the building to a lessee for three years at monthly rental of P200,000. The leasee paid the rental for one year of P2,400,000 and P2,000,000 security deposit to be refunded upon expiration of the lease. On April 1, 2022, the lessee lease bonus. On April 1, 2022tionally paid P1,200,000 as a TEDDY the entity paid P600,000 to a broker as a finder fee. During 2022, Highland Company paid property tax of P200,000 and P50,000 insurance on the building. What amount should be reported as net rental income of the lessor? a. 1,400,000 b. 1,075,000 800,000 500,000 396
Expert Solution
steps

Step by step

Solved in 3 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Section 179 Deduction and Modified Accelerated Cost Recovery System (MACRS) Depreciation
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.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS