On January 1, 2017, Indigo Co. leased a building to Sweet Inc. The relevant information...
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On January 1, 2017, Indigo Co. leased a building to Sweet Inc. The relevant information related to the lease is as follows. 1. The lease arrangement is for 10 years. 2. The leased building cost $4,725,000 and was purchased for cash on January 1, 2017. 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 $276,200 per year and are made at the end of the year. 5. Property tax expense of $82,500 and insurance expense of $9,600 on the building were incurred by Indigo 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 Indigo Co. should make in 2017.
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