8 P Q 12-13

[The following information applies to the questions displayed below.] On July 1, 2012, Falk Company signed a contract to lease space in a building for 20 years. The lease contract calls for annual (prepaid) rental payments of $90,000 on each July 1 throughout the life of the lease and for the lessee to pay for all additions and improvements to the leased property. On June 25, 2017, Falk decides to sublease the space to Ryan & Associates for the remaining 15 years of the lease-Ryan pays $225,000 to Falk for the right to sublease and it agrees to assume the obligation to pay the $90,000 annual rent to the building owner beginning July 1, 2017. After taking possession of the leased space, Ryan pays for improving the office portion of the leased space at a $1,800,000 cost. The improvements are paid for by Ryan on July 5, 2017, and are estimated to have a useful life equal to the 15 years remaining in the life of the building Required 1. Prepare entries for Ryan to record (a) its payment to Falk for the right to sublease the building space, (b) its payment of the 2017 annual rent to the building owner, and (c) its payment for the office improvements View transaction list Journal entry worksheet 2 Record the sublease for $225,000 cash Note: Enter debits before credits Date General Journal Debit Credit June 25 Journal entry worksheet 2 Record the annual lease rental of $90,000 cash. Note: Enter debits before credits. Date General Journal Debit Credit July 01 Journal entry worksheet 2 Record the costs of leasehold improvements of $1,800,000 cash Note: Enter debits before credits. Date General Journal Debit Credit July 05 2. Prepare Ryan's year-end adjusting entries required at December 31, 2017, to (a) amortize the $225,000 cost of the sublease, (b) amortize the office improvements, and (c) record rent expense. (Do not round your intermediate calculations.) View transaction list Journal entry worksheet Record the year-end adjusting entry for the amortization expense of the leasehold Note: Enter debits before credits. Date General Journal Debit Credit Dec 31 Journal entry worksheet Record the year-end adjusting entry for the amortization expense of the leasehold improvements Note: Enter debits before credits. Date General Journal Debit Credit Dec 31