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What amount should be recognized as loss on finance lease

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Question - On January 1, 2021, Neo Culture Technology Company leased an equipment for 6 years from another entity. The entity recorded the right of use asset at P4,800,000 which included a purchase option of P100,000.

On this date, Neo Culture Technology Company is reasonably certain to exercise the option. The equipment had an eight-year useful life and fair value of $300,000 at the end of the useful life. On January 1, 2027, the entity did not exercise the purchase option.

Required - What amount should be recognized as loss on finance lease in 2027?

Reference no: EM133168944

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