On January 1 2011 Secada Co leased a building to

On January 1, 2011, Secada Co. leased a building to Ryker Inc. The relevant information
related to the lease is as follows.1. The lease arrangement is for 10 years.2. The leased
building cost $3,600,000 and was purchased for cash on January 1, 2011.3. The building is
depreciated on a straight-line basis. Its estimated economic life is 50 years with no salvage
value.4. Lease payments are $220,000 per year and are made at the end of the year.5.
Property tax expense of $85,000 and insurance expense of $10,000 on the building were
incurred by Secada in the first year. Payment on these two items was made at the end of the
year.6. Both the lessor and the lessee are on a calendar-year basis.(a) Prepare the journal
entries that Secada Co. should make in 2011.(b) Prepare the journal entries that Ryker Inc.
should make in 2011.(c) If Secada paid $30,000 to a real estate broker on January 1, 2011, as
a fee for finding the lessee, how much should be reported as an expense for this item in 2011
by Secada Co.?View Solution:
On January 1 2011 Secada Co leased a building to
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