On July 1, 2014, Morrison Corp. leased a building to Wisen Inc. Both companies use IFRS. The

Question:

On July 1, 2014, Morrison Corp. leased a building to Wisen Inc. Both companies use IFRS. The relevant information on the lease is as follows.
1. The lease arrangement is for 10 years.
2. The leased building cost $5.5 million and was purchased by Morrison for cash on July 1, 2014.
3. The building is depreciated on a straight-line basis. Its estimated economic life is 40 years.
4. Lease payments are $325,000 per year and are made at the end of the lease year, and so the first lease payment was made June 30, 2015.
5. Property tax expense of $57,000 and insurance expense of $11,000 on the building were incurred by Morrison for the 2014 fiscal year. Payment for these two items was made on July 1, 2014.
6. Both the lessor and the lessee have their fiscal years on a calendar-year basis.
Instructions
(a) Prepare the journal entries and any year-end adjusting journal entries made by Morrison Corp. in 2014.
(b) Prepare the journal entries and any year-end adjusting journal entries made by Wisen Inc. in 2014.
(c) If Morrison paid $30,000 to a real estate on July 1, 2014, as a fee for finding the lessee, how much should Morrison Corp. report as an expense for this fee item in 2014?
(d) Would any of the accounting treatment you have provided in parts (a) through (c) above change if Morrison had been using ASPE?
Broker
A broker is someone or something that acts as an intermediary third party, managing transactions between two other entities. A broker is a person or company authorized to buy and sell stocks or other investments. They are the ones responsible for...