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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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.