25. On January 1, 20X0, ABC company signed a 12-year lease for warehouse space. ABC has an option to renew the lease for an additional 8 year period on or before January 1, 20X4. during January 20X2, ABC made substantial improvements to the warehouse. The cost of these improvements was P540, 000, with an estimated useful life of 15 years. On December 31, 20X2, ABC intended to exercise the renewal option. ABC has taken a full year’s depreciation on this leasehold improvement. In the December 31, 20X2 statement of financial position, what is the carrying amount of the leasehold improvement?

Vishnu

Vishnu

Gordon Inc., a private company that follows ASPE, entered into a lease agreement with Canada Leasing Corporation to lease a warehouse for six years.  Annual lease payments are $21,000, payable at the beginning of each lease year.  Gordon Inc. signed the lease agreement on January 1, 2021, and made the first payment on that date. At the end of the lease, the machine will revert back to Canada Leasing Corporation.  The normal useful life of the warehouse is 10 years.  At the time of the lease, the warehouse could be purchased for $108,000.  Gordon does not know the implicit rate of the lease; Gordon's incremental borrowing rate is 10%.  Gordon uses straight-line depreciation for this type of asset. Required: Using the three criteria under ASPE, prove whether this is an operating or capital lease. Prepare a lease amortization schedule for the lease.  Round all amounts to the nearest dollar. Prepare the journal entries for 2021 and 2022 for Gordon Inc.  Round amounts to the nearest…