How many years should the right of use asset be depreciated?
They Company leased a heavy equipment to be used in its construction business from Theirs Company. The terms of the lease contract follows:
Lease term-------10 years
Useful life of the equipment -------12 years
Annual rental payable at the beginning of lease, January 1, 2020 -----500,000
Implicit interest rate------------------------------------------------------14%
PV of annuity of 1 in advance for 10 periods at 14%--------------------5.95
PV of 1 for 10 periods at 14%----------------------------0.27
They has the option to purchase the equipment at the end of the lease term for P400,000., which approximates the fair value of the asset at purchase option date. How many years should the right of use asset be
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