chine has a useful life of 12 years with residual value of P300,000 at the end of 12 years. Title passes to Cola Company at the lease expiration date. Cola Company used straight line depreciation for all plant assets. Aggregate lease payments have a present value of P5,400,000 based on an appropriate rate of interest. Question: What amount should be recorded as depreciation expense of the right of use asset for the current year? A. 450,000
chine has a useful life of 12 years with residual value of P300,000 at the end of 12 years. Title passes to Cola Company at the lease expiration date. Cola Company used straight line depreciation for all plant assets. Aggregate lease payments have a present value of P5,400,000 based on an appropriate rate of interest. Question: What amount should be recorded as depreciation expense of the right of use asset for the current year? A. 450,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
At the beginning of current year, Cola Company signed an eight-year noncancelable lease
for a new machine, requiring P750,000 annual payments at the beginning of each year.
The machine has a useful life of 12 years with residual value of P300,000 at the end of 12 years.
Title passes to Cola Company at the lease expiration date. Cola Company used straight line
based on an appropriate rate of interest.
Question:
What amount should be recorded as depreciation expense of the right of use asset for the
current year?
A. 450,000
B. 425,000
B. 425,000
C. 675,000
D. 637,500
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