On 1 January 20X1, Altimar leases a fleet of electric bicycles to a local authority under an operating lease for 6 years. The lessee paid a non-refundable upfront fee of 24,000 on signature, then pays 30,000 at the beginning of each year. Altimar recognises income on a straight-line basis. On 1 January 20X3, the payment for the four remaining years is reduced to 25,000, payable in advance, with no change in term. Compute the balance of lease payments received in advance at 31 December 20X2 and the annual lease income from 1 January 20X3.
- Upfront fee paid at the start of the lease
- 24,000
- Original annual payment (payable in advance)
- 30,000
- Lease term
- 6
- New annual payment
- 25,000