The following information pertains to a leased contract entered into by Blue Company, lessee, on January 1, 2018: Lease term, 5 years, useful life of the leased asset, 20 years; Annual rental payable at year-end, P800,000 and the implicit rate is10%. The lease contract contains an option for Blue Company to extend for another 5 years but at the commencement of the lease, the exercise of the option is not reasonably certain, however on January 1, 2021, Blue Company decided to extend the lease term by another 5 years. However, the annual rental starting 2023 (6th year) will be P1,000,000 and the new implicit rate is 8%. How much is the depreciation expense in 2021?
The following information pertains to a leased contract entered into by Blue Company, lessee, on January 1, 2018: Lease term, 5 years, useful life of the leased asset, 20 years; Annual rental payable at year-end, P800,000 and the implicit rate is10%. The lease contract contains an option for Blue Company to extend for another 5 years but at the commencement of the lease, the exercise of the option is not reasonably certain, however on January 1, 2021, Blue Company decided to extend the lease term by another 5 years. However, the annual rental starting 2023 (6th year) will be P1,000,000 and the new implicit rate is 8%. How much is the
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 6 images
