On January 1, 2017, Beyonce Company leased a music studio from Simon company on a 5-year lease term at P150,000 annual rental payable in advance. Simon offered Beyonce the option to purchase the asset at a bargain price of P200,000 at the end of the lease contract. The estimated economic life of the asset is 15 years, and its estimated residual value is P4,000. the interest implicit in the lease is 12%. (Please round off present value factors to 4 decimal places.) At the end of the lease term, Beyonce did not purchase the right of use asset. How much loss on failure to exercise the bargain purchase option is to be reported by Beyonce in its 2021 financial statement?
On January 1, 2017, Beyonce Company leased a music studio from Simon company on a 5-year lease term at P150,000 annual rental payable in advance. Simon offered Beyonce the option to purchase the asset at a bargain price of P200,000 at the end of the lease contract. The estimated economic life of the asset is 15 years, and its estimated residual value is P4,000. the interest implicit in the lease is 12%. (Please round off present value factors to 4 decimal places.) At the end of the lease term, Beyonce did not purchase the right of use asset. How much loss on failure to exercise the bargain purchase option is to be reported by Beyonce in its 2021 financial statement?
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