Kerlouan, a coffee roaster, leases a sales kiosk in a railway station for 15 months, through 5 quarters each payable at the start of the quarter; the quarterly payment is 15,000 and the first is paid on the day the kiosk is made available, the commencement date. The 4 remaining quarterly payments, discounted at the incremental borrowing rate of 2% per quarter, amount to 57,116 (rounded to the nearest euro). No other element enters the cost. Record the entry at the commencement date.
- Quarterly lease payment payable at the start of the quarter
- 15,000
- Present value of the lease payments not yet paid
- 57,116