On January 1, 2021, Maroon Company entered into a five-yearnonrenewable operating lease, commencing on that date, for officespace. The office space has a useful life of 50 years and the leasespecifies a rent of P20,000 per month. How much is the rent receivableor unearned rent income at the end of 2022?

Unearned rent income is the income which will be earned in future but for which the other party has…

Answered: specifies a rent of P20,000 per month.…

Business

Accounting

specifies a rent of P20,000 per month. How much is the rent receivable or unearned rent income at the end of 2022?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

On January 1, 2021, Maroon Company entered into a five-year
nonrenewable operating lease, commencing on that date, for office
space. The office space has a useful life of 50 years and the lease
specifies a rent of P20,000 per month. How much is the rent receivable
or unearned rent income at the end of 2022?

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