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Bart Corporation needs a warehouse. On January 1, 20A1, it entered into a lease contract with Matibay

Corporation with the following terms:

Term 5 years

Total rentals for 5 years 1,000,000

Annual real property tax (RPT) shouldered by Bart 30,000

The rentals were payable every January 1, in five annual equal installments. During 20A1, Bart incurred the following expenditures in connection with the leased

Ordinary repairs of wall and posts 100,000

Replacement of windows and roofs 200,000

Ordinary repairs neither materially add to the value of the property nor prolonged its life. However, the replacement of the windows and roofs, which were incurred on July 1, 20A1, arrested the deterioration of the property but it maintained its life. The remaining life of the warehouse is 8 years.

In 20A2. Bart constructed leasehold improvements on said leased warehouse for P300,000. The construction was completed on March 31, 20A2. Said improvements were utilized starting April 1, 20A2 with useful life of 7 years

REQUIRED

1. Determine the deductible expense for the years ended December 31, 20A1.

2. Determine the deductible expense for the years ended December 31, 20A2.

3. Determine the capital expenditures for the years ended December 31, 20A1.

4. Determine the capital expenditures for the years ended December 31, 20A2.

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