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At the beginning of its fiscal year, Lakeside Inc. leased office space to LTT Co

ID: 2559209 • Letter: A

Question

At the beginning of its fiscal year, Lakeside Inc. leased office space to LTT Corporation under a nine-year operating lease agreement. The contract calls for quarterly rent payments of $45,000 each. The office building was acquired by Lakeside at a cost of $4.0 million and was expected to have a useful life of 25 years with no residual value.

What will be the effect of the lease on Lakeside’s earnings for the first year (ignore taxes)? (Enter your answer in whole dollars.

Lakeside increases its earnings by:

Explanation / Answer

the following is the working:

lake side increases its earnings by: $20,000

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