On December 31, 2020, Ethan Company signed a five-year, non-cancelable lease for a machine with Best Company. The terms of the lease called for Ethan Company to make annual payments of P800,000 in advance starting on December 31, 2020 and every December 31 thereafter. The machine has an estimated useful life of six years and a P40,000 unguaranteed residual value at the end of the five-year lease term. The machine reverts back to the lessor at the end of the five-year lease term. Ethan Company uses the straight-line method of depreciation for all of its depreciable assets. What is the carrying amount of the Right-of-Use Machine on December 31, 2021? (Use three decimal places)
On December 31, 2020, Ethan Company signed a five-year, non-cancelable lease for a machine with Best Company. The terms of the lease called for Ethan Company to make annual payments of P800,000 in advance starting on December 31, 2020 and every December 31 thereafter. The machine has an estimated useful life of six years and a P40,000 unguaranteed residual value at the end of the five-year lease term. The machine reverts back to the lessor at the end of the five-year lease term. Ethan Company uses the straight-line method of depreciation for all of its depreciable assets. What is the carrying amount of the Right-of-Use Machine on December 31, 2021? (Use three decimal places)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:On December 31, 2020, Ethan Company signed a five-year, non-cancelable lease for a machine
with Best Company. The terms of the lease called for Ethan Company to make annual payments
of P800,000 in advance starting on December 31, 2020 and every December 31 thereafter. The
machine has an estimated useful life of six years and a P40,000 unguaranteed residual value at
the end of the five-year lease term. The machine reverts back to the lessor at the end of the
five-year lease term. Ethan Company uses the straight-line method of depreciation for all of its
depreciable assets.
What is the carrying amount of the Right-of-Use Machine on December 31, 2021? (Use three
decimal places)
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