Case: Accounting for Lease Extension
(Revised and updated 5/2013) Jack leases an office building from Jill. The lease is classified as an operating lease under the guidance of ASC Topic 840, Leases. The lease does not include any renewal options upon the expiration, but Jack is in the process of negotiating an extension of the lease. Jack proposes to make a single up-front payment of $1.2 million to Jill in exchange for an extension of the lease at the current rate for another 10 years. The extension would create a new lease under ASC par. 9 of 840-10-35-4. 1. 2. Should Jack include the $1.2 million in the calculation of the minimum lease payments when classifying the new lease? Assuming the new lease …show more content…
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Technical Case Studies SOLUTIONS
Case: Classification of cash received from an equity investee
(Revised and updated 5/2013) Company ABC (“ABC”) is an equity investor in 2 joint