Meridal, a company financing agricultural equipment, leased a combine harvester under a finance lease on 1 January 20X1. Its net investment in the lease at that date is 250,000, at an interest rate implicit in the lease of 6 %. The customer pays 60,000 every 31 December, in arrears. Determine the finance income for 20X2 and the net investment at 31 December 20X2.
- Net investment at the commencement date
- 250,000
- Interest rate implicit in the lease
- 6 %
- Annual payment (in arrears)
- 60,000