What is Rita Company interest expense

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Question - Ube Company owns an office building having a 10-year useful life and normally charges tenants P3,000 per square meter per year for the office space. Because the occupancy rate is low, Ube Company lease 100 sq. m to Rita Company at P2,000 per square meter for the first two years of a four year operating lease. Rent for remaining years will be at the P3,000 rate. Rita Company moved into the building on January 1, 2019 and paid the first year's rent in advance. Rita also paid P80,000 in lease bonus. The implicit lease rate known to both parties is at 10%.

Required - What is Rita Company's interest expense for 2019?

a. 80,332

b. 85,415

c. 65,515

d. 93,515

Reference no: EM132803278

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