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What is the amount of interest expense to be recognized

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Question - On 1 January 2020, AA Limited into a three year lease of a truck to use for delivery. The annual payment was $240,000 payment in arrears with the first payment on 31 December 2020. AA Limited incurred initial direct costs of $100,000. The estimated useful life of the truck was 4 years with no residual value and AA Limited would not obtain the ownership the ownership of the truck at the end of the lease. The interest rate implicit in the lease was 9% per annum. What is the amount of interest expense to be recognized for the year ended 31 December 2021?

A. $37,997

B. None

C. 54,676

D. $47,807

E. 460,183

Reference no: EM132915850

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