Use the following information about a net lease to answer this question. Measurement Base rent Operating expenses Taxes Cost of tenant improvements 7,500 rentable square feet $12 per square foot annually $22,500 per year $15,000 per year $20,000 Parking Cost of old lease buyout Moving costs Tenant-improvement allowance $2,000 per month (fixed over the life of the lease) $20,000 $10,000 $2 per square foot

Use the following information about a net lease to answer this question. Measurement Base rent Operating expenses Taxes Cost of tenant improvements 7,500 rentable square feet $12 per square foot annually $22,500 per year $15,000 per year $20,000 Parking Cost of old lease buyout Moving costs Tenant-improvement allowance $2,000 per month (fixed over the life of the lease) $20,000 $10,000 $2 per square foot

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

Chapter20: Accounting For Leases

Section: Chapter Questions

Problem 9E: Lessor Accounting with Guaranteed Residual Value Use the information for Edom Company in E20-8,...

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What is the proper accounting treatment to record a variable lease payment indexed off the CPI? Group of answer choices Record the lease liability based on highest annual increase in the CPI for the past 10 years. Calculate the lease liability based on the base payment and debit an additional expense in subsequent years based on the change in the CPI. Calculate the lease liability based on expected payments over the life of the lease after considering increases in the CPI. Capitalize and depreciate the increased payments based on CPI indexing.
A tenant has a gross lease with an ‘‘expense stop’’of $2.75/SF. If the building has 200,000 square feet of leasable space, reimbursable operating expenses of $700,000, and the tenant rents 25,000 SF, then how much does the tenant owe the landlord in expense reimbursements (the total $ amount)? Question options: $3.50/SF. $25,000. $58,750. $18,750
Lessor Accounting with Guaranteed Residual Value Use the information for Edom Company in E20-8, except that the residual value was guaranteed by Davis Company (the lessee). Required: 1. Assuming that the lease is a sales-type lease, calculate the selling price. 2. Prepare a table summarizing the lease receipts and interest income earned by Edom. 3. Prepare journal entries for Edom tor the years 2019 and 2020.
Use the information in RE20-3. Prepare the journal entries that Richie Company (the lessor) would make in the first year of the lease assuming the lease is classified as a sales-type lease. Assume that the lessee is required to make payments on December 31 each year. Also assume that Richie had purchased the equipment at a cost of 200,000.
Assume the following: 2,000 SF rentable area, 4-year triple net lease at $18.00 p.s.f. per year, with monthly payments ($1.50 per month). Tenant improvements paid by tenant at lease commencement (that will not be recovered): $40,000, 8% discount rate is appropriate What is "effective" rent p.s.f.? Assume the following: 2,000 SF rentable area, 4-year triple net lease at $18.00 p.s.f. per year, with monthly payments ($1.50 per month). Tenant improvements paid by tenant at lease commencement (that will not be recovered): $40,000, 8% discount rate is appropriate What is "effective" rent p.s.f.? $23.82 $24.05 $23.28 $22.98
A lessee has developed the following information regarding a lease contract, with payments due at the beginning of the period. Use this information to determine the amount at which the lease obligation will initially be recorded. Description Amount Present value Present value of total of annuity due amount Annual lease $4,500 S16.528 S14,258 payment Discount rate 6% Number of periods 4 Purchase option $300 S238 Group of answer choices: 18,000 14,495 16,528 14,258 18,300 16,766
Given the following information, calculate the effective monthly rent payment. Lease Term: 10 years, Concession: 1 year free rent to be spread over the term of the lease, Rental Space: 5000 square feet, Rental Rate: $35 per square foot per year, Landlord's discount rate: 9%. Excel link: Excel Sheet.xlsx $5,687 $10,689 $7,081 $12,471
Each of the three independent situations below describes a finance lease in which annual lease payments are payable at the beginning of each year. The lessee is aware of the lessor's implicit rate of return. Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) Lease tere (years) Lesson's rate of return (known by lessee) Lessee's incremental borrowing rate Fair value of lease asset Situation 11 Situation 2 Situation 3 Lease Payments Right-of-use Asset/Lease 10 11% 12% Payable $630,000 Situation 2 20 9% 10% Required: as a a. & b. Determine the amount of the annual lease payments as calculated by the lessor and the amount the lessee would record as right-of-use asset and a lease liability, for each of the above situations. Note: Round your answers to the nearest whole dollar. $1,010,000 5 12% 11% $215,000
Lease ValuationA building owner is evaluating the following alternatives for leasing space in an office building forthe next five years. Expenses are estimated to be $9 psf for the first year and forecast to increase at$1 psf per year thereafter.Net lease with steps. Rent is $15 psf for the first year and will increase $1.50 per square foot foreach year until the end of the lease. All operating expenses are paid (reimbursed) by the tenant.Net lease with CPI adjustments. Rent is $16 psf for the first year. After year 1, the rent will beincreased by any increase in the CPI which is expected to be 3% per year. Again, all the expenses arereimbursed by the tenant.Gross lease. Rent will be $28 psf each year with the lessor responsible for paying all of the operatingexpenses.Gross lease with an expense stop and CPI adjustment. Rent will be $24 psf the first year and increaseby the full amount of the CPI (3%) after the first year with an expense stop for the landlord at $9 psf.The CPI and…
In an operating lease, when the annual lease payment is greater than the straight-line amortization of annual lease payments accruing to the lessor, there is? Group of answer choices None of these Prepaid rent expense Rent payable Additional rent expense
Each of the four independent situations below describes a finance lease in which annual lease payments are payable at the beginning of each year. The lessee is aware of the lessor's implicit rate of return. Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EVA of S1, PVA of $1. EVAD of $1 and PVAD of $1) Lease term (years) Lessor's rate of return Fair value of lease asset Lessor's cost of lease asset Residual value: Estimated fair value. Guaranteed fair value Situation 1 Situation 2 Situation 3 Situation 4 1 Lease Payments 6 10% $ 58,000 $ 58,000 e 0 2 Situation 9 11% $ 358,000 $ 358,000 $ 58,000 Residual Value PV of Lease Guarantee Payments 0 7 9% $ 83,000 $ 53,000 $ 15,000 $ 15,000 Required: a. & b. Determine the amount of the annual lease payments as calculated by the lessor and the amount the lessee would record as a right-of-use asset and a lease liability, for each of the above situations. Note: Round your answers to the nearest whole dollar amount. PV of…
Each of the four independent situations below describes a finance lease in which annual lease payments are payable at the beginning of each year. The lessee is aware of the lessor's implicit rate of return. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Situation 2 1 Lease term (years) Lessor's rate of return 10% 11% 9% Fair value of lease asset $51,000 $ 351,000 $ 76,000 $ 466,000 Lessor's cost of lease asset $ 51,000 $ 351,000 $ 46,000 $ 466,000 Residual value: Estimated fair value Guaranteed fair value 5 Situation 1 Situation 2 Situation 3 Situation 4 Lease Payments 3 0 4 8 6 9 0 $ 51,000 $8,000 $ 46,000 0 $8,000 $ 51,000 Required: a. & b. Determine the amount of the annual lease payments as calculated by the lessor and the amount the lessee would record as a right-of-use asset and a lease liability, for each of the above situations. Note: Round your answers to the nearest whole dollar amount. 12% a. & b.…