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sladkih [1.3K]
3 years ago
12

Phoenix Agency leases office space for $7,700 per month. On January 3, Phoenix incurs $105,600 to improve the leased office spac

e. These improvements are expected to yield benefits for 10 years. Phoenix has 8 years remaining on its lease. Compute the amount of expense that should be recorded the first year related to the improvements. a) $7,700 b) $20,900 c) $18,260 d) $10.560
Business
1 answer:
nadezda [96]3 years ago
7 0

Answer:

$13,200 per year

Explanation:

Amount incurred to improve the office space = $

Improvement expected to yield benefit = 10 years

Remaining life on it's lease = 8 years

Since the office space is not going to remain with Phoenix after the lease period, it means that the improvement expenses will be expensed over the remaining lease period I.e 8 years.

Therefore, the amount of expense that should be recorded the first year related to improvements can be calculated as;

= Amount incurred to improve the office space ÷ remaining life on its lease

= $105,600 ÷ 8

= $13,200 per year

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<h3>What is Factory built Housing?</h3>

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CHECK THE COMPLETE QUESTION:

---------------housing is a generic term that includes any form of housing that is manufactured by precision techniques in a factory setting and then transported to the building site for final assembly.

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