As an incentive to enter a 4 year operating lease for a warehouse, Dunhill Company received an upfront cash of P60,000 upon signing an agreement on January 1, 2021.The annual rental is P1,115,000. In addition, Dunhill was allowed to occupy the warehouse rent free for a period of 4 months. 1. How much should be recognized by Dunhill as lease expense for 2021?

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Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.