What is the appropriate accounting for the real estate

Assignment Help Accounting Basics
Reference no: EM132676967

Question - Lessor and Lessee enter into a seven-year lease for a small office building. The contract designates in addition to rental payments to the Lessor, the Lessee is required to pay real estate taxes and the insurance for the building directly to third parties. The real estate taxes would be owed by Lessor, regardless of whether it leased the building and regardless of to whom it leased the building. Lessor is the named insured on the building's insurance policy (that is, the insurance protects Lessor's investment in the building and Lessor would receive the proceeds from any claim). The annual lease payments are fixed at $300,000 per year, while the annual real estate taxes and insurance premium will vary and will be billed by third parties to Lessee each year.

Required -

a. Are the real estate taxes and the insurance costs separate components of the lease contract?

b. What is the appropriate accounting for the real estate and insurance costs?

Reference no: EM132676967

Questions Cloud

Make the journal entry at the date of the bond purchase : On January 1, 2020, Kingbird Company purchased 9% bonds having a maturity value of $410,000, Make the journal entry at the date of the bond purchase
Features individuals high in openness-emotional stability : You are on a team which features individuals high in openness and emotional stability. What is the likely result of task conflict within your team? Why is this?
Module activity-individual preparedness planning : Where you are getting your information to inform your individual preparedness planning. What information could the field of public health provide you?
What amount of total operating cost would you expect : Assume an occupancy rate of 70% per month. What amount of total operating cost would you expect the hospital to incur
What is the appropriate accounting for the real estate : Lessor and Lessee enter into a seven-year lease for a small office building. What is the appropriate accounting for the real estate
Prepare the journal entry at December : Prepare the journal entry at December 31, 2020, and December 31, 2022, for Indigo related to these bonds
Allied universal-current management and leadership : Discuss the organization's background, history, financial position, along with current management and leadership.
What is the critical fractile : When we sell, at full retail, a unit of PB&J, we get a price of $100. It costs us $40 to acquire a unit of PB&J from our wholesaler, and a unit
Prepare journal entries for Whispering Company : Prepare journal entries for Whispering Company to (a) record the transactions related to these bonds in 2020

Reviews

Write a Review

Accounting Basics Questions & Answers

  What is the common-size statement value of inventory

A firm has sales of $1,030, net income of $187, net fixed assets of $505, What is the common-size statement value of inventory

  Discuss the elements of a good fraud report

What does it mean to create a "Culture of Honesty, Openness, and Assistance?" Give an example from an organization with which you have been affiliated.

  Accounting field and accounting job postings

Use the Internet or the Strayer Online database to research career options within the accounting field and accounting job postings in your local area to respond to the questions in the assignment.

  What is the gain or loss to be recorded on the sale

The company sold the building in 2013 for $60m but was not paid till 2015. What is the gain or loss to be recorded on the sale in 2013(ignore tax)

  What is the schedule performance index for the project

The actual cost of the work performed at the end of the third week for the project in Problem is $16,500. Determine the cost performance index for the project.

  Determine the standard unit materials cost per pound

Determine the standard unit materials cost per pound for a standard batch. Round all per unit answers to nearest whole cent

  How much in self-employment taxes must carrie pay

If the business had a net loss of $10,000 (instead of a $25,000 profit), how much in self-employment taxes must Carrie pay

  How do retiree health benefits differ from pension

how do retiree health benefits differ from pension benefits with respect to accounting funding regulation and employee

  Prepare the journal entry to record the impairment of asset

Prepare the journal entry to record the impairment of the asset at December 31, 2017. The company does not use accumulated amortization accounts

  Change in accounting estimate

A change in an accounting estimate is: how much depreciation expense should the company recognize on December 31, 2010?

  On what date does this note mature

Sylvestor Systems borrows $107,000 cash on May 15, 2017, by signing a 150-day, 7% notes. On what date does this note mature

  Relative advantages of partnership

What are the relative advantages of partnership versus limited partnership as a form of doing business? What legal principles are most likely to bite partnerships?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd