Question

Help Save & Exit Sub Crestfield leases office space. On January 3, the company incurs $12,000 to improve the leased office space. These Improvements are expected to yield benefits for 10 years. Crestfield has 4 years remaining on its lease. What journal entry would be needed to record the expense for the first year related to the Improvements? Multiple Choice Debit Amortization Expense $1,200, credit Accumulated Amortization-Leasehold improvements $1200. O Debit Depletion Expense $3,000 credit Accumulated Depletion $3,000. Debit Depreciation Expense $1200, credit Accumulated Depreciation $1200 Debit Depletion Expense $12.000, credit Accumulated Depletion $12.000 Debit Amortization Expense $3,000, credit Accumulated Amortization Leasehold improvements $3.000

Answer 1

The cost of improvements is to be expensed over remaining lease years.

Amortization Expense = 12000/4 = $3000

Debit Amortization Expense $3000; credit Accumulated Amortization-Leasehold Improvements $3000.

Option E is correct