How much should be charged in the statement of comprehensive income for the year to 31 December 2009 as a result of the lease agreement?

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On 1 January 2009, Peming Co entered into a finance lease agreement to obtain a machine which would have cost of $166,000 if it had been purchased outright. The machine has a useful life of six years, and the lease period is five years. At the end of the lease period, the machine will be returned to thelesser.

As well as requiring a final payment, the terms of the lease are:

Initial rental$8,000

Monthly rentals, payable in arrears60 x $3,200

Interest rate implicit in lease8% per annum

Peming has a 31 December year end, and provides for depreciation on machinery on the straight-line basis.

How much should be charged in the statement of comprehensive income for the year to 31 December 2009 as a result of the lease agreement?
A . $40,307
B . $40,947
C . $45,840
D . $46,480

Answer: C

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