Depreciation on furniture and fixtures

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Reference no: EM133239452

Question 1.

On January 2, 2018, X entered into a twenty-year operating lease for the vacant lot adjacent Y retail store used as a parking lot. As agreed in the lease, Y paved and fenced in the lot at a cost of P787,500. The improvements were completed on April 1, 2022, and estimated to have a useful life of fifteen years. No provision for depreciation has been recorded. Depreciation on furniture and fixtures was P210,000 for 2018.

Question 2.

During November 2018, a competitor company filed a patent-infringement suit against Don claiming damages of P1,100,000. The company's legal counsel has indicated that an unfavorable verdict is probable and a reasonable estimate of the court's award to the competitor is P625,000. The company has not reflected or disclosed this situation in the financial statements.

Reference no: EM133239452

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