Nordalys leases a bottling line. The lease provides for 5 annual lease payments of 50,000, payable in arrears (at the end of each year). The interest rate implicit in the lease cannot be readily determined; Nordalys's incremental borrowing rate is 6 %. Nordalys incurred initial direct costs of 4,000; the estimate of the restoration costs required by the lease, measured under IAS 37, is 12,000 (given). Compute the initial lease liability and then the cost of the right-of-use asset (rounded to the nearest euro).
- Annual lease payment made at year-end
- 50,000
- Number of lease payments
- 5
- Lessee's incremental borrowing rate
- 6 %
- Initial direct costs
- 4,000
- Estimated restoration costs (IAS 37)
- 12,000