Ball Co is a company which owns several properties. The average useful life of a property is 50
years. Several years ago, Juggy Co had entered a lease contract with Ball Co for a newly built
property owned by Ball Co. The lease period was for 20 years. Juggy Co has been using this
property for its administrative purposes since the inception of the lease.
Towards the end of year 20X2, the employees of Juggy Co had begun to vacate the building as
Juggy Co was moving to another location. The building was unused at the end of 20X2. In
20X3, Juggy Co decided to lease out the whole building and entered contract with June Co for
12 years on 31 December 20X3. On this date, the remaining lease period between Juggy Co
with Ball Co is 15 years and the remaining life of the building is 45 years.

discuss how the sublease above should be accounted for
year ended 31 December 20X3.
Your answer should include a discussion on how Juggy Co should account for the lease
with Ball Co, and for the lease with June Co.