Solution-What amount should be recognized as depreciation

What amount should be recognized as depreciation expense

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Question - At the beginning of current year, Nori Company entered into 5-year lease for drilling equipment.

The entity accounted for the acquisition as a finance lease for P2,400,000, which included a P100,000 purchase option. At the commencement date, the entity is reasonably certain to exercise the purchase option. The entity estimated that the equipment's fair value will be P200,000 at the end of the 8-year life and regularly used straight line depreciation on similar equipment. What amount should be recognized as depreciation expense on the leased asset for the current year?

a. 480,000

b. 460,000

c. 300,000

d. 275,000

Reference no: EM133075043

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What amount should be recognized as depreciation expense

Reference no: EM133075043

Reference no: EM133075043

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