Problem 2At the beginning of the current year BTS Company entered into a 10-year lease for an equipment. Theentity accounted for the acquisition at the present value of lease payment of P4,900,000 which includeda P200,000 residual value guarantee.At the end of the lease, the asset will revert back to the lessor. It is estirnated that the asset's fair valueat the end of the 12-year useful life will be P100,000. The entity regularly used the straight-linedepreciation on simillar equipment.What amount should be recognized as depreciation expense of the right of use asset for the currentyear?

BTS Company entered into a 10 year lease for an equipment. The present value of the lease payments…

Answered: What amount should be recognized as…

Business

Accounting

What amount should be recognized as depreciation expense of the right of use asset for the current year?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Audit Procedures

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Problem 2
At the beginning of the current year BTS Company entered into a 10-year lease for an equipment. The
entity accounted for the acquisition at the present value of lease payment of P4,900,000 which included
a P200,000 residual value guarantee.
At the end of the lease, the asset will revert back to the lessor. It is estirnated that the asset's fair value
at the end of the 12-year useful life will be P100,000. The entity regularly used the straight-line
depreciation on simillar equipment.
What amount should be recognized as depreciation expense of the right of use asset for the current
year?

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