On January 1, 2012, Bacon Co

question 80

Short Answer

On January 1, 2012, Bacon Co. leased a building to Horner Corp. for a ten-year term at an annual rental of $140,000. At inception of the lease, Bacon received $560,000 covering the first two years' rent of $280,000 and a security deposit of $280,000. This deposit will not be returned to Horner upon expiration of the lease but will be applied to payment of rent for the last two years of the lease. What portion of the $560,000 should be shown as a current and long-term liability, respectively, in Bacon's December 31, 2012 balance sheet?

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Definitions:

Charter Amendments

Changes or modifications made to a corporation’s charter or articles of incorporation, typically requiring approval from shareholders and/or regulatory authorities.

Strict Liability

A legal principle that holds a party responsible for damages or harm caused by their actions or products, without the need to prove negligence or fault.

Cash-Out Combinations

Financial arrangements, often in mergers and acquisitions, where shareholders receive cash instead of shares of the new or acquiring company.

Publicly Held Corporation

A corporation whose shares are publicly traded on a stock exchange, allowing for broad ownership by investors.