Myro Company leased a new machine from Myie Corp. on May 1, 2014 under a lease with the following information: Annual rental payable at beginning of each lease year P 400,000; Lease term 10 years Useful life of machine 12 years Implicit interest rate 14% Present Value of an annuity of 1 advance for 10 periods at 10 periods at 14%. 0.27 Myro has the option to purchase the machine on May 1, 2024, by paying P 500,000, which approximate the expected fair value of the machine on the option exercise date. On May 1, 2014, how much should Myro record the leased asset?

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Myro Company leased a new machine from Myie Corp. on May 1, 2014 under a lease with the following information:

Annual rental payable at beginning of each  lease year  P 400,000; Lease term          

 10 years                            Useful life of machine         12 years                                

 Implicit interest rate            14%                                    Present Value of an annuity of 1 advance for 10 periods at 10 periods at 14%.                  0.27          

  Myro has the option to purchase the machine on May 1, 2024, by paying P 500,000, which approximate the expected fair value of the machine on the option exercise date.  On May 1, 2014, how much should Myro record the leased asset?

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