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On January 1, 2020, Yemen Company leased an equipment for 6 years from another entity. The entity recorded the asset at P 4, 800, 000 which included a purchase option of P 100, 000. At the commencement date, the lessee is reasonably certain to exercise the purchase option. The equipment had an eight-year useful life and a fair value of P 300, 000 at the end of the useful life. On January 1, 2026, the entity did not exercise the purchase option. What is the loss on finance lease to be recognized by Yemen Company for 2026? a. 1, 325, 000 b. 1, 425, 000 c. 200, 000 d. 0

On January 1, 2020, Yemen Company leased an equipment for 6 years from another entity. The entity recorded the asset at P 4, 800, 000 which included a purchase option of P 100, 000. At the commencement date, the lessee is reasonably certain to exercise the purchase option. The equipment had an eight-year useful life and a fair value of P 300, 000 at the end of the useful life. On January 1, 2026, the entity did not exercise the purchase option. What is the loss on finance lease to be recognized by Yemen Company for 2026? a. 1, 325, 000 b. 1, 425, 000 c. 200, 000 d. 0

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Problem 10-29 (IFRS)
On January 1, 2020, Yemen Company leased an equipment for 6 years from
another entity. The entity recorded the asset at P 4, 800, 000 which included
a purchase option of P 100, 000.
At the commencement date, the lessee is reasonably certain to exercise the
purchase option.

The equipment had an eight-year useful life and a fair value of P 300, 000 at
the end of the useful life.
On January 1, 2026, the entity did not exercise the purchase option.
What is the loss on finance lease to be recognized by Yemen Company for
2026?
a. 1, 325, 000
b. 1, 425, 000
c. 200, 000
d. 0

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