On January 2, 2019, CanonCompany signed an 8-year non-cancellable lease for a new machine, requiring P120,000 annual payments at the beginning of each year. The machine has an estimated life of 12 years, with no salvage value. Title passes to Canon at the lease expiration date. Canon uses straight-line method of depreciation for all of its plant asses. Aggregate lease payments have a present value on January 2, 2017, of P864,000 based on an appropriate rate of interest. For 2018, how much should Canon record as depreciation expense for the leased machine?
On January 2, 2019, CanonCompany signed an 8-year non-cancellable lease for a new machine, requiring P120,000 annual payments at the beginning of each year. The machine has an estimated life of 12 years, with no salvage value. Title passes to Canon at the lease expiration date. Canon uses straight-line method of depreciation for all of its plant asses. Aggregate lease payments have a present value on January 2, 2017, of P864,000 based on an appropriate rate of interest. For 2018, how much should Canon record as depreciation expense for the leased machine?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 2, 2019, CanonCompany signed an 8-year non-cancellable lease for a new machine, requiring P120,000 annual payments at the beginning of each year. The machine has an estimated life of 12 years, with no salvage value. Title passes to Canon at the lease expiration date. Canon uses straight-line method of
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