Ferlane leases an industrial furnace from 1 January 20X1 (commencement date, year-end 31 December). The 4 annual lease payments of 45,000 are paid in advance, each 1 January; the first was paid at the commencement date. The lease liability, which covers the 3 remaining payments, amounts to 118,094 (given, rounded), at a rate of 7 %. Compute the interest for 20X1 and the lease liability at 31 December 20X1 (rounded to the nearest euro).
- Lease liability at 1 January 20X1 (after the first payment)
- 118,094
- Discount rate
- 7 %
- Annual lease payment made each 1 January
- 45,000