Question

Spirula Trading Inc. sublets a part of its office building to Jade Inc. for a period of ten years. Where will the company disclose this information?

A.

as an off- balance sheet item

B.

disclosed as a liability in the balance sheet

C.

as a tangible asset in the balance sheet

D.

disclosed as an intangible asset in the balance sheet

E.

as a long-term liability in the balance sheet

Plato Course Accounting, Semester A
Unit 4: Careers, Regulations, and Ethics in Accounting
Post Test: Careers, Regulations, and Ethics in Accounting

Answer 1

solution

Subletting

it means you take some thing on rent and futher you rent that asset with some one

e.g spirula trading Inc Take office Building on rent from Mr ABC and Spirula Trading letout this office Building in full/part to JAde Inc.

1) Mr Abc is the owner of the property

2) Spirula Trading Inc sublet the Office Building to Jade Inc

hence Office building is not an asset or liability of the Spirula Trading Inc

So Spirula Trading Inc will disclose office Building as an off- balance sheet item

Other Options b,c,d,e are not correct because Office Building Own By some one else and Office Building is not an asset or liability of Spirula Trading Inc