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How should the lease be accounted of alaska for the year

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Reference no: EM132816614

Problem 1: On January 1, 2019, Alaska, Ltd entered into an agreement to lease a machine that had an estimated life of 10 years. The lease period is for four years with annual rentals of P50,000 payable in advance from January 1, 2019. The machine is expected to have a nil residual value at the end of its life. The machine had a fair value of P250,000 at the inception of the lease. How should the lease be accounted for in the financial statements of Alaska for the year ended December 31, 2019? Why? (Answer here is the kind of lease all in lower case: e.g. finance lease, operating lease, sales type lease, sale and leaseback). Give two reasons.

Reference no: EM132816614

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