What are the principal components for the lessee

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On 1 July 2019, Tech Ltd (lessee) contracts for leasing equipment for five years at an annual rental of $20 000, with the first payment payable immediately and subsequent annual payments due on 1 July. The equipment could have been purchased from supplier for $80 747.

Question 1: The rate of interest implicit in the lease is 12% and end of the reporting period is 30 June. Form a schedule showing the division of the lease rental into interest and principal components for the lessee over the term of the lease.

Reference no: EM132481378

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