b Company, a lessor of office machines, purchased a new machine for P 150,000 on January 1, 2020, which was leased the same day to Esau Co.  The machine is expected to have a ten-year life abd will be depreciated P 50,000 per year. The lease is for a three-year period expiring January 1, 2023 and provides for annual rental payments of P 100,000 beginning January 1, 2020. In addition, Esau paid P 60,000 as a lease bonus to obtain a three-year lease.    In its 2020 profit or loss, What amount should Jacob report as operating profit on this leased asset?

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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.