At the beginning of its fiscal year, Lakeside Inc. leased office space to LTT Corporation under a

Question:

At the beginning of its fiscal year, Lakeside Inc. leased office space to LTT Corporation under a ten-year lease agreement. The contract calls for quarterly lease payments of $25,000 at the end of each quarter. The office building was acquired by Lakeside at a cost of $1 million and was expected to have a useful life of 25 years with no residual value. Lakeside seeks a 10% return on its lease investments. Appropriate adjusting entries are made quarterly.

Required:

1. What pretax amounts related to the lease would LTT report in its balance sheet at December 31, 2013?

2. What pretax amounts related to the lease would LTT report in its income statement for the year ended December 31, 2013?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...