On January 1,2014,A1A Company leased a warehouse to Elisha under an operating lease for ten years at $80,000 per year,payable the first day of each lease year.A1A paid $36,000 to a real estate broker as a finder's fee.The warehouse is depreciated at $20,000 per year.During 2014,A1A incurred insurance and property tax expense totaling $15,000.A1A's net rental income for 2014 should be

Question

Quizplus · Accepted Answer

First, we need to calculate the total rental income for 2014:
$80,000 lease payment - $15,000 insurance and property tax = $65,000 total rental income

Next, we need to deduct the expenses incurred by A1A:
Depreciation: $20,000 
Finder's fee: $36,000 / 10 years = $3,600

Total expenses: $20,000 + $3,600 = $23,600

Finally, we can calculate the net rental income:
$65,000 total rental income - $23,600 total expenses = $41,400 net rental income.

On January 1,2014,A1A Company Leased a Warehouse to Elisha Under