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What dominic should record a capitalized leased asset of

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Question 1. Dominic Company leased a new machine from Isidore Company on May 1,2015, under a lease with the following information:

Lease term-10 years; Useful life of machine - 12 years

Annual rental payable at beginning of each year P400, 000

Implicit interest rate 14%

Present value of an annuity of 1 in advance for 10 periods at 14% 5.95

Present value of 1 for 10 periods at 14% 0.27

Dominic has the option to purchase the machine on May1, 2025 by paying P500,000, which approximates the expected fair value of the machine on the option exercise date. On May 1, 2015, Dominic should record a capitalized leased asset of ________________

a. P 2,515,000

b. P 2,380,000

c. P 2,245,000

d. P 1,980,000

Reference no: EM132575854

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