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What is the specified asset in the contract

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Question - On January 1, 2022, Neko Company (leasee) have entered into lease agreement with Khloe company (leasor), below are the terms of the lease: 10 year rent of office space with an option to extend rent for an additional 5 years. The contract includes other charges such as cleaning services, security services as well as the utilities. The office space also includes cabinets and built-in tables.

The 1st monthly payment details are as follows:

Office space 30,000

Cabinets 1,000

Air-conditioning unit 20,000

Utilities 10,000

Cleaning services 500

Security services 500

Property Tax 1,000

Total 61,000

Required - Answer the following:

1. What are the non-lease components in the contract and how should it be recognized in the books?

2. What is the specified asset in the contract?

3. What is the date of the enforceable period?

4. What is the amount of lease component to be recorded?

5. What is the amount of non-lease component to be recorded?

6. What is the amount of other expense that cannot be classified under lease and non-lease component?

7. On July 31, 2022, Khloe company decided to cancel the lease. Is this valid? Why and why not?

Reference no: EM133178716

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