Solution-How much is the revised annual depreciation at the

How much is the revised annual depreciation at the date

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Reference no: EM132949127

Question - Longganisa, Inc. will rent a vacant warehouse located in #27 Quintin Paredes St. Binondo Manila, starting January 1, 2020. The following were the lease details:

Annual rent (Fixed) P200,000

Lease term 5 years

Interest Implicit in the lease 10%

Warehouse space 5,000 sq. meters

The lessor leased the warehouse to Longganisa at its stand-alone selling price. The useful life of the warehouse is 4 years.

On January 1, 2022, Longganisa and the lessor agreed to modify the lease contract as follows:

Increase in annual rent P80,000

Warehouse space 10,000 sq. meters

The interest implicit in the lease is not readily available. The incremental borrowing rate of the company as of date of modification is 9%.

Required - How much is the revised annual depreciation at the date of modification?

Reference no: EM132949127

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How much is the revised annual depreciation at the date

Reference no: EM132949127

Reference no: EM132949127

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