Crestfield Leases Office Space for $7,000 Per Month

question 40

Multiple Choice

Crestfield leases office space for $7,000 per month. On January 3, the company incurs $12,000 to improve the leased office space. These improvements are expected to yield benefits for 10 years. Crestfield has 4 years remaining on its lease. What journal entry would be needed to record the expense for the first year related to the improvements?

• A)Debit Amortization Expense $1,200; credit Accumulated Amortization $1,200.
• B)Debit Depletion Expense $3,000; credit Accumulated Depletion $3,000.
• C)Debit Depreciation Expense $1,200; credit Accumulated Depreciation $1,200.
• D)Debit Depletion Expense $12,000; credit Accumulated Depletion $12,000.
• E)Debit Amortization Expense $3,000; credit Accumulated Amortization $3,000.Amortization Expense = $12,000/4 = $3,000

---

Definitions:

Audition

The process of hearing or the ability to perceive sound by detecting vibrations via an organ such as the ear.

Rods

Photoreceptor cells in the retina of the eye that are highly sensitive to light and enable vision in low-light conditions.

Primary Qualities

In philosophy, qualities that are inherent to an object and can be objectively measured, such as shape, size, and motion.

Olfactory Receptors

Specialized sensory cells located in the nasal cavity responsible for the detection of odor molecules, playing a critical role in the sense of smell.