The following information relates to a lease between
Canneries Limited (lessor) and Fruiterers Limited (lessee). 3
lease payments of $20,000 each are made annually in advance and a
final lease payment of $15,000 is made at the end of the 3 year
lease term. The implicit interest rate 10%. The amount of the
interest expense that is recognised in the first year of the lease
is:
$15,402;
$4,598;
$6,598;
$7,500.