r-end by the lessee with a six-month advance notice. there is no renewal agreement. on july 8, 2016, paris company spent p20,000 on internal changes and painting. madeline's accounts showed the following data on january 1, 2016: initial cost of the building, p250,000 (accumulated depreciation, p60,000); estimated remaini
substantive audit of liabilities
37. on july 1, 2016, madeline company leased a small building and its site to paris company on a five-year contract. the lease provides for an advance rental payment of p10,000 which does not reduce any other payment, plus an annual rental payment of p40,000 payable cach july 1 starting in 2016. the lease can be terminated at any year-end by the lessee with a six-month advance notice. there is no renewal agreement. on july 8, 2016, paris company spent p20,000 on internal changes and painting. madeline's accounts showed the following data on january 1, 2016: initial cost of the building, p250,000 (
Required:
give the amounts that each party should report on its 2016 and 2017 income statements and
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