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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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Answer:

Schmidt, the owner of a small business, has a large piece of used farm equipment for sale. He offers to sell the equipment to Barry for $10,000. Discuss the legal effects of the following events on the offer:  

• Schmidt dies prior to Barry’s acceptance, and at the time he accepts, Barry is unaware of Schmidt’s death.  

• The night before Barry accepts, fire destroys the equipment.  

• Barry pays $100 for a thirty-day option to purchase the equipment. During this period, Schmidt dies, and later Barry accepts the offer, knowing of Schmidt’s death.  

• Barry pays $100 for a thirty-day option to purchase the equipment. During this period, Barry dies, and Barry’s estate accepts Schmidt’s offer within the stipulated time period.

Explanation:

A contact is a binding agreement between two or more people.

Schmidt dies prior to Barry’s acceptance, and at the time he accepts, Barry is unaware of Schmidt’s death: Schmidt's death would normally null this offer but because Barry is unaware of his death at the time of acceptance, and the offer is not for a personal service, the offer holds.

The night before Barry accepts, fire destroys the equipment: there is no binding contract before a buyer accepts an offer.  

Barry pays $100 for a thirty-day option to purchase the equipment. During this period, Schmidt dies, and later Barry accepts the offer, knowing of Schmidt’s death: The option keeps the offer alive regardless of Schmidt’s death as long as Barry paid for the option .

Barry pays $100 for a thirty-day option to purchase the equipment. During this period, Barry dies, and Barry’s estate accepts Schmidt’s offer within the stipulated time period: the death of the offeree, in this case Barry, would normally nullify the offer but due to the option and the acceptance within the stipulated time,  the offer holds.

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