CamCo Ltd. leased floor space in a new office building. Rent will cost $10,000 permonth for a ten-year lease, but some renovations are needed and will be paid by CamCo to customize the space. The renovations include installing walls to create a new office and boardroom cost $8,000) , new flooring cost $5,800) , painting cost $1,500) andupdated wiring to accommodate computer servers cost $8,700) . How should these costs be handled for accounting purposes by CamCo?
A) They should all be charged to rent expense.
B) They should be capitalized as development costs.
C) They should all be capitalized as leasehold improvements.
D) Painting costs should be capitalized to leasehold improvements and other costs should be charged to rent expense.
E) Painting costs should be charged to rent expense and the other costs should be capitalized to leasehold improvements.
Correct Answer:
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