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How much will be recognized as depreciation expense

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Problem 1: On January 1, Northway Corporation entered into a 5-year lease for an extraction equipment. The entity accounted for the acquisition as a finance lease for P2,000,000 which included an option to purchase for P120,000. At the commencement date, the entity reasonably certain to purchase the equipment. The company estimated that the equipment will have a fair value of P200,000 at the end of the 10 year life. How much will be recognized as depreciation expense of the leased asset using the straight line method?

Reference no: EM132856694

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