The Valmeuse association leases a minibus from 1 January 20X1 (year-end 31 December). The lease provides for 4 annual lease payments of 30,000 payable in advance each 1 January, the first at the commencement date. The interest rate implicit in the lease, which can be readily determined, is 5 %. Rounding each amount to the nearest euro, compute the initial lease liability, the interest for 20X2 and the lease liability at 31 December 20X2.
- Annual lease payment made in advance
- 30,000
- Number of lease payments
- 4
- Interest rate implicit in the lease
- 5 %