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Joy leased a 216 square meter of idle land to Universidad de Rosas, a proprietary educational institution, for a period of twenty years effective January
Joy leased a 216 square meter of idle land to Universidad de Rosas, a proprietary educational institution, for a period of twenty years effective January 01, 2020. The lease contract provides that the university will erect a building thereon to be used as classroom, which it did on the lot of Joy. The agreement provides also that the building shall become the property of the lessor at the end of the lease. The building was completed on June 30, 2022 at a cost of Php. 1,800,000.00. The estimated life of the leasehold improvement is 30 days and will be occupied in the immediately succeeding quarter following its construction. If was further agreed that University of Pasay will pay the real estate tax on the land assessed at Php. 3,000 annually. On January 2, 2020, University of Pasay paid Joy Php. 120,000.00 consisting the two-year period from 2020 to 2021.The rent income to be reported by Joy in 2020* a. 60,000.00 b. 123,000.00 c. 120,000.00 d. 63,000.00 Using the same data in above, the income to be reported by Joy in 2022 under outright method is:* a. 1,860,000.00 b. 1,862,250.00 c. 1,860,750.00 d. 1,863,000.00
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