PROBLEM 1 PROBLEM 2 Integrity Company acquired a machine by signing… PROBLEM 1 Image transcription textIntegrity Company reported the following difference between the book basis and tax basis of assets andliabilities on December 31, 2022 which is the end of the first year of operations (see image below). It isexpected that the litigation liability will be settled in 2023. The difference in accounts receivable … Show more… Show more PROBLEM 2 Integrity Company acquired a machine by signing a four-year lease on January 1, 2021. Annual rentals of P1,742,174 are payable at the beginning of each year starting January 1, 2021. Integrity is given the option to buy the machine for P300,000 at December 31, 2024, when the asset’s market price is expected to be P1,250,000. The asset’s useful life is 6 years, at the end of which the asset’s residual value is expected to be P100,000. Integrity uses straight-line method to depreciate this asset. The implicit interest rate is 10%. On December 31, 2024, the end of the lease term, Durable failed to exercise the purchase option. (Round off the PV factor to four decimal places, then do not round off during the computation) How much is the loss to be recognized as a result of the failure to exercise the purchase option?A. P1,885,179B. P1,859,896C. P1,791,596D. P1,641,656Accounting Business Financial Accounting
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