Boyce Company leased a music studio from Justine company on a 6-year lease term at P250,000 annual rental payable in advance. Justine offered Boyce the option to purchase the asset at a bargain price of P200,000 at the end of the lease contract. The estimated economic life of the asset is 10 years, and its estimated residual value is P5,000. the interest implicit in the lease is 12%. At the end of the lease term, Boyce did not purchase the leased asset. (Round off the PV factor to four decimal places, then do not round off during the computation) How much loss on failure to exercise the bargain purchase option was reported by Boyce?
Boyce Company leased a music studio from Justine company on a 6-year lease term at P250,000 annual rental payable in advance. Justine offered Boyce the option to purchase the asset at a bargain price of P200,000 at the end of the lease contract. The estimated economic life of the asset is 10 years, and its estimated residual value is P5,000. the interest implicit in the lease is 12%. At the end of the lease term, Boyce did not purchase the leased asset. (Round off the PV factor to four decimal places, then do not round off during the computation) How much loss on failure to exercise the bargain purchase option was reported by Boyce?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Boyce Company leased a music studio from Justine company on a 6-year lease term at P250,000 annual rental payable in advance. Justine offered Boyce the option to purchase the asset at a bargain price of P200,000 at the end of the lease contract. The estimated economic life of the asset is 10 years, and its estimated residual value is P5,000. the interest implicit in the lease is 12%. At the end of the lease term, Boyce did not purchase the leased asset. (Round off the PV factor to four decimal places, then do not round off during the computation)
How much loss on failure to exercise the bargain purchase option was reported by Boyce?
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