On January 1, 2019, Amaya company signed a 12 year lease for warehouse space. The entity has an option to renew the lease for an additional 8-year period on or before January 1, 2022. During January 2021, the entity made substantial improvement to the warehouse. The cost of the improvement was 972,000 with an estimated useful life of 15 years. On December 31, 2021, the entity intended to exercise the renewal option. The entity has taken a full year depreciation on this leasehold improvement for 2021. On December 31, 2021, what is the carrying amount of the leasehold improvement?

On January 1, 2019, Amaya company signed a 12 year lease for warehouse space. The entity has an option to renew the lease for an additional 8-year period on or before January 1, 2022. During January 2021, the entity made substantial improvement to the warehouse. The cost of the improvement was 972,000 with an estimated useful life of 15 years. On December 31, 2021, the entity intended to exercise the renewal option. The entity has taken a full year depreciation on this leasehold improvement for 2021. On December 31, 2021, what is the carrying amount of the leasehold improvement?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 13E: On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million....

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