Answer:
Journal 1
Office Improvements $22,000 (debit)
Cash $22,000 (credit)
Being recognition of the Capital expenditure
Journal 2
Depreciation expense $ 2,200 (debit)
Accumulated Depreciation - Office Improvements $ 2,200 (credit)
Being Using the 10 years remaining on its lease to depreciate the lease
Explanation:
The improvements to leased offices are of a Capital Nature. Thus thus is a capital expenditure not a revenue expenditure.
Any improvements made on the leased property belongs to the lessor and thus the lessee will still be bound by the lease period.
In the year of improvements the journals are as follows
Office Improvements $22,000 (debit)
Cash $22,000 (credit)
Being recognition of the Capital expenditure
A journal to record the depreciation also need to be effected
Depreciation expense $ 2,200 (debit)
Accumulated Depreciation - Office Improvements $ 2,200 (credit)
Being Using the 10 years remaining on its lease to depreciate the lease