On January 1, 2020 ABC Company leased a building to XYZ Company for a 10-year term at an annual rental of P500,000. At the inception of the lease, ABC received P2,000,000 covering the first two years' rent of P1,000,000 and a security deposit of P1,000,000. This deposit will not be returned to XYZ upon expiration of the lease but will be applied to payment of rent for the last two years of the lease. What portion of the P2,000,000 should be shown as current and noncurrent liability in ABC's December 31, 2020 statement of financial position? a. Current liability P0, Noncurrent liability P2,000,000 b. Current liability P500,000, Noncurrent liability P1,000,000 c. Current liability P1,000,000, Noncurrent liability P1,000,000 d. Current liability P1,000,000, Noncurrent liability P500,000
On January 1, 2020 ABC Company leased a building to XYZ Company for a 10-year term at an annual rental of P500,000. At the inception of the lease, ABC received P2,000,000 covering the first two years' rent of P1,000,000 and a security deposit of P1,000,000. This deposit will not be returned to XYZ upon expiration of the lease but will be applied to payment of rent for the last two years of the lease. What portion of the P2,000,000 should be shown as current and noncurrent liability in ABC's December 31, 2020 statement of financial position?
a. Current liability P0, Noncurrent liability P2,000,000
b. Current liability P500,000, Noncurrent liability P1,000,000
c. Current liability P1,000,000, Noncurrent liability P1,000,000
d. Current liability P1,000,000, Noncurrent liability P500,000
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