Haystack, Inc. manufactures machinery used in the mining industry.
Haystack, Inc. manufactures machinery used in the mining industry. On January 2, 2018 it leased equipment with a cost of P480,000 to Silver Point Co. The 5-year lease calls for a 10% down payment and equal annual payments of P175,820 at the end of each year. The equipment has an expected useful life of 5 years. Silver Point's incremental borrowing rate is 10%, and it
Question: Why is that the book value of the leased asset at December 31, 2018 is 468,000? Explain thoroughly your answer.
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