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What is the interest expense related to the lease

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Question - RENTER entered into the contract on 1 January 2017 for 5 years, annual rental payments are P100,000 in arrears (that is, 31 December each year) and at the end of the lease term, the machine will be returned back to the lessor. RENTER also incurred direct cost of P5,550 as direct cost. The economic life of a machine is 10 years. Use the discount rate of 3%.

Required -

1. What is the present value of lease payments?

2. What is the interest expense related to the lease for 2019?

3. How much is the balance of related liability as of December 31, 2019?

4. How much is the depreciation annually related to the asset?

5. What is the journal entry for January 1, 2017?

Reference no: EM133095456

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