Bart Corporation needs a warehouse. On January 1, 20A1, it entered into a lease contract with Matibay
Corporation with the following terms:
Term 5 years
Total rentals for 5 years 1,000,000
Annual real property tax (RPT) shouldered by Bart 30,000
The rentals were payable every January 1, in five annual equal installments. During 20A1, Bart incurred the following expenditures in connection with the leased
Ordinary repairs of wall and posts 100,000
Replacement of windows and roofs 200,000
Ordinary repairs neither materially add to the value of the property nor prolonged its life. However, the replacement of the windows and roofs, which were incurred on July 1, 20A1, arrested the deterioration of the property but it maintained its life. The remaining life of the warehouse is 8 years.
In 20A2. Bart constructed leasehold improvements on said leased warehouse for P300,000. The construction was completed on March 31, 20A2. Said improvements were utilized starting April 1, 20A2 with useful life of 7 years
REQUIRED Determine the deductible expense for the years ended December 31, 20A1.
Determine the deductible expense for the years ended December 31, 20A2.
Determine the capital expenditures for the years ended December 31, 20A1.
Determine the capital expenditures for the years ended December 31, 20A2.
