At the beginning of current year, Evita Company entered into an 8-year finance lease forequipment. The entity
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Question:
The entity accounted for the acquisition of the finance lease at P5,000,000 which included a
P200,000 purchase option. At the commencement date, the entity is not reasonably certain to
exercise the purchase option.
The expected fair value of the equipment is P400,000 at the end of the 10-year useful life. The
straight line depreciation is used.
What amount of depreciation should be recognized for the current year?
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