On January 1, 2019, AA Company leased a plastic molding machine from BB Company. Additional information regarding the lease agreement follows: Lease term 4 years Annual rental payment, in advance 66,500 Residual value at the end of the lease term 15,000 Residual value guaranteed by AA 0 Implicit rate 8% Expected useful life of the machine 6 years AA intends to return the machine to BB at the end of the lease. The annual rental payment includes P1,500 to cover the costs of maintenance and insurance. AA Company, likewise paid P8,000 to its broker for securing the lease. (Use two decimal places for present value factor in answer the following questions) - What is the balance of the lease liability at January 1, 2019? - What is the interest expense to be reported by AA in 2019? - What is the balance of the lease liability at December 31, 2019? - What is the depreciation expense reported in 2019? - What is the carrying value of the leased asset at December 31, 2019? Please provide solutions

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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.