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Phoenix Agency leases office space. On January 3, Phoenix incurs $105,600 to improve the leased office space. 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. $8,125.
b. $13,000.
c. $6,000.
d. $65,000.
e. $20,000.

Respuesta :

Parrain

Answer: $13,200

Explanation:

The cost incurred will have to be recognised over the entire useful period at an equal rate.

The useful period is the lease period which is 8 years.

First year expense = 105,600/8

= $13,200

Answer not in options.

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