On January 1, 20xl, FATUITY FOOLISHNESS Co. entered into a 4-year lease agreement with STUPIDITY, Inc. for industrial equipment. Lease payment is P200,000 payable annually starting on January 1, 20x1. FATUITY knows that the lessor expects a 10% return on the lease. FATUITY has a 12% incremental borrowing rate. The equipment is expected to have an estimated useful life of 5 years and a residual value of P50,000. The lease agreement contained a bargain purchase option at PI00,000 exercisable at the end of the lease term. It is reasonably certain as of inception of the lease that FATUITY will exercise the option in the future. FATUITY uses the straight line method of depreciation. Requirement: Provide all the pertinent entries.

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Market Efficiency

Market efficiency refers to the market's ability to provide investors with all available information about investment options for buying and selling securities. Market efficiency reflects the true value of securities without undervaluing or overvaluing them. When the quality and quantity of information increase, the market becomes more efficient, allowing it to reduce arbitrage and obtain higher market returns from investment. In a well-functioning market, everyone receives all information completely and immediately at no cost. It opens up a plethora of opportunities for investors to access various investment options.