How much is the annual depreciation for the asset

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Reference no: EM132785393

problem 1: Norie Company leased an asset on a finance lease. The present value of the lease payments total P686,000 and the fair value of the asset is P750,000. The asset has a useful life of 5 years and the lease term is 4 years. The bargain purchase option for the asset at the end of its useful life is nominal and is substantially lower than the value of the asset at that date. Depreciation for the asset is computed using straight line method. How much is the annual depreciation for the asset?

Option 1: 187,500

Option 2: 150,000

Option 3: 171,500

Option 4: 137,200

Reference no: EM132785393

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