On 1 January 20X1, Talvio, a lessor, recognises a finance lease of a bottling line. The net investment in the lease amounts to 100,000 at that date; the interest rate implicit in the lease is 8 %. The lessee pays an annual lease payment of 25,000 on 31 December of each year (in arrears). Compute the finance income for 20X1 and the net investment at 31 December 20X1.
- Net investment at 1 January 20X1
- 100,000
- Interest rate implicit in the lease
- 8 %
- Annual payment received at year-end
- 25,000