What expense should be recorded in the current year

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Reference no: EM132806637

Problem 1: Dubai Company purchased an oil rig for P7,500,000 on January 1, 2020. The life of the rig is 10 years and the expected cost to dismantle the rig at the end of 10 years is P1,500,000. The appropriate discount rate for the entity is 10%. The present value of the dismantling cost at 10% is P577,500. What expense should be recorded in the current year as a result of this events?

a. Depreciation expense of P750,000 and interest expense of P150,000
b. Depreciation expense of P750,000
c. Depreciation expense of P900,000
d. Depreciation expense of P807,750 and interest expense of P57,750.

Reference no: EM132806637

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