What is expense related to the lease under operating lease

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On January 1, 2019 Lola Inc. purchased an. equipment for 10M for the purpose of leasing it. The machine had an estimated life 10 years life with no residual value. Three months after purchase of the same year, Justin Inc. agreed to lease the machine for 3 years.

Justin was referred by Lyn Inc. and Lola paid P150,000 for the referral. The client paid the rental for the first two years outright during commencement worth 7,000,000 and the payment for the third year will be done at the end of lease term worth 1,500,000 only as mentioned in the contract. On top of that Leni paid P1,000,000 at the start of the lease to secure the leasing of machinery since there is a high demand for the said item.

Problem 1: What is the expense related to the lease for 2019 under operating lease?

Reference no: EM132805952

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