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50,000 b. 600,000 c. 625,00

50,000 b. 600,000 c. 625,00

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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What amount of depreciation should be recognized for the current year? *
*see attached pic
a. 550,000
b. 600,000
c. 625,000
d. 460,000

At the beginning of current year, Axie Company entered into an 8-year finance lease for an equipment. The entity accounted for the acquisition of the finance lease at Php5,000,000 which included a Php200,000 purchase option. At the commencement date, the entity is reasonably certain to exercise the purchase option. The expected fair value of the equipment is Php400,000 at the end of the 10-year useful life. The straight line depreciation is used.
Transcribed Image Text:At the beginning of current year, Axie Company entered into an 8-year finance lease for an equipment. The entity accounted for the acquisition of the finance lease at Php5,000,000 which included a Php200,000 purchase option. At the commencement date, the entity is reasonably certain to exercise the purchase option. The expected fair value of the equipment is Php400,000 at the end of the 10-year useful life. The straight line depreciation is used.
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