What amount should be recognized as depreciation expense of the right of use asset for the current year?
What amount should be recognized as depreciation expense of the right of use asset for the current year?
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter10: Long-term Liabilities
Section: Chapter Questions
Problem 10.5AP
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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?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F76c9f381-8554-4fa6-886a-f885c0a8e394%2Fb9a04607-0256-4db7-932c-5ac8e1b4d854%2Ffb9tel_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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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