Dahyun contracted a 4-year lease of a machinery with Jackson Weng on January 1, 20x1. Rent in 20x1 is ₱10,000 and as stipulated in the contract, shall increase by 10% annually starting on January 1, 20x2. Rentals are payable at every year end. Dahyun pays Jackson a lease bonus of ₱5,000 on January 1, 20x1. Dahyun opts to use the practical expedient allowed under PFRS 16 for leases of low value assets. How much is the lease expense in 20x1?

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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Dahyun contracted a 4-year lease of a machinery with Jackson Weng
on January 1, 20x1. Rent in 20x1 is ₱10,000 and as stipulated in
the contract, shall increase by 10% annually starting on January
1, 20x2. Rentals are payable at every year end. Dahyun pays Jackson
a lease bonus of ₱5,000 on January 1, 20x1. Dahyun opts to use the
practical expedient allowed under PFRS 16 for leases of low value
assets. How much is the lease expense in 20x1?

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