Valix Finacc vol 1 Problem 20-16

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 20 Problem 20-16

Requirement a

1. Leasehold improvement – building                                                5,000,000

            Cash                                                                                                                5,000,000

                                                                                                           

2. Rent expense (50,000 x 12)                                                                  600,000

            Cash                                                                                                                   600,000

3. Depreciation (5,000,000 / 10)                                                              500,000

            Accumulated depreciation                                                                               500,000

Requirement b

Accumulated depreciation                                                                2,500,000

Loss on leasehold cancelation                                                            2,500,000

Leasehold improvement – building                                                                5,000,000