Expenses Calculation for Leased Office Space

What should be Clark's current year expense relating to utilization of the office space?

Answer:

Clark Co.'s current year expense for utilizing the office space is $720,000.

Clark Co. leased office space for five years at a monthly rental of $60,000. In addition to the monthly rent, Clark also paid the first month's rent, last month's rent, security deposit, and installation costs for new walls and offices. The current year expense for utilizing the office space is calculated based on the total monthly rentals for the year.

The total annual rent would be $60,000 per month multiplied by 12 months, resulting in $720,000. This amount represents Clark Co.'s current year expense relating to the utilization of the office space. It includes the lease payments made throughout the year and excludes the initial payments such as security deposit and installation costs.

It is crucial for businesses to accurately calculate their expenses related to leased office space to manage their financial resources effectively. By understanding the total cost of utilizing the office space, companies like Clark Co. can make informed decisions about their operational expenditures and budget allocation.