Jimmy Company leased a delivery van for payments of $10,000 per year for three years.Jimmy Company also paid $1,200 for new larger windows in the van.Jimmy Company also spent $4,300 for special storage racks for the van.What do Leasehold Improvements equal?

Question

Quizplus · Accepted Answer

Leasehold improvements refer to any changes or upgrades made to a leased property or asset to better suit the lessee's needs. In this case, the larger windows and special storage racks for the delivery van would be considered leasehold improvements, and their combined cost is $5,500. Therefore, the correct choice is D. The $10,000 annual lease payments do not qualify as leasehold improvements.

Jimmy Company Leased a Delivery Van for Payments of $10,000