Victory Company signed a 6-year lease for a store space on January 1, 2017. The entity has an option to renew the lease for an additional 4-year period on or before January 1, 2020. During January 2019, the entity made substantial improvement to the store. The cost of the improvement was P1,080,000 with an estimated useful life of 10 years. On December 31, 2019, the entity intended to exercise the renewal option. The entity has taken a full year depreciation on this leasehold improvement for 2019. On December 31, 2019, what is the carrying amount of the leasehold improvement? A. P810,000 B. P900,000 C. P945,000 D. P972,000
Victory Company signed a 6-year lease for a store space on January 1, 2017. The entity has an option to renew the lease for an additional 4-year period on or before January 1, 2020. During January 2019, the entity made substantial improvement to the store. The cost of the improvement was P1,080,000 with an estimated useful life of 10 years. On December 31, 2019, the entity intended to exercise the renewal option. The entity has taken a full year depreciation on this leasehold improvement for 2019. On December 31, 2019, what is the carrying amount of the leasehold improvement? A. P810,000 B. P900,000 C. P945,000 D. P972,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Victory Company signed a 6-year lease for a store space on January 1,
2017. The entity has an option to renew the lease for an additional 4-year
period on or before January 1, 2020. During January 2019, the entity made
substantial improvement to the store. The cost of the improvement was
P1,080,000 with an estimated useful life of 10 years. On December 31,
2019, the entity intended to exercise the renewal option. The entity has
taken a full year depreciation on this leasehold improvement for 2019. On
December 31, 2019, what is the carrying amount of the leasehold
improvement?
A. P810,000
B. P900,000
C. P945,000
D. P972,000
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