What is the carrying value of the leased asset on december

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Problem 1: On January 1, 2019, SMB Co. entered into a 10-year lease for equipment. The acquisition was accounted for as a finance lease for P4,900,000 which includes a P200,000 guaranteed residual value. At the end of the lease, the asset will revert back to the lessor. It is estimated that the asset's fair value at the end of its 12-year life will be P100,000. SMB Co. regularly uses the straight-line depreciation on similar equipment. What is the carrying value of the leased asset on December 31, 2019?

Reference no: EM132776280

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