Gary Company leased a music studio from Prada company on a 6-year lease term at P250,000 annual rental payable in advance. Prada offered Gary the option to purchase the asset at a bargain price of P200,000 at the end of the lease contract. The estimated economic life of the asset is 10 years, and its estimated residual value is P5,000. the interest implicit in the lease is 12%. At the end of the lease term, Gary did not purchase the leased asset. (Round off the PV factor to four decimal places, then do not round off during the computation) How much loss on failure to exercise the bargain purchase option was reported by Gary?
Gary Company leased a music studio from Prada company on a 6-year lease term at P250,000 annual rental payable in advance. Prada offered Gary the option to purchase the asset at a bargain price of P200,000 at the end of the lease contract. The estimated economic life of the asset is 10 years, and its estimated residual value is P5,000. the interest implicit in the lease is 12%. At the end of the lease term, Gary did not purchase the leased asset. (Round off the PV factor to four decimal places, then do not round off during the computation) How much loss on failure to exercise the bargain purchase option was reported by Gary?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 10GI: Owens Company leased equipment for 4 years at 50,000 a year with an option to renew the lease for 6...
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Gary Company leased a music studio from Prada company on a 6-year lease term at P250,000 annual rental payable in advance. Prada offered Gary the option to purchase the asset at a bargain price of P200,000 at the end of the lease contract. The estimated economic life of the asset is 10 years, and its estimated residual value is P5,000. the interest implicit in the lease is 12%. At the end of the lease term, Gary did not purchase the leased asset. (Round off the PV factor to four decimal places, then do not round off during the computation)
How much loss on failure to exercise the bargain purchase option was reported by Gary?
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