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Time Value of Money: Leases, Liabilities and Bonds

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Lisa's Boutique is renting prime store space at the Regional Mall and just signed a five-year lease effective January 1 of the current year with the following terms:

Refundable security deposit $1,500
Monthly lease payments $3,000
Lease bonus due at signing $18,000

Lisa has had to make significant renovations to the store prior to moving in. The renovations cost $50,000 and have a useful life of 8 years. Lisaâ??s Boutique will record occupancy expense for the current year ended December 31 of:
- $51,100
- $49,600
- $49,900
- $45,850

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Solution Summary

The solution computes occupancy expense for Lisa Boutique based on five-year lease.

Solution Preview

Lease Payments = 3000*12 = 36,000

Renovation Cost = 50000/5 ...

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