With a lease commencement date of January 1, 2019, Emgrand C…
With a lease commencement date of January 1, 2019, Emgrand Company leases equipment with a fair value of $625,000 to Bolero Company under the following terms: Lease term 3 years Annual rental payable at beginning of each year $200,000 Useful life of equipment 5 years Implicit interest rate in lease (known by Bolero) 8 % Emgrand routinely leases equipment of this nature. Bolero has no other leased equipment. Neither entity considers the 3-year term to be a major part of the asset’s 5-year life. Nor do they consider the present value of the lease payments to be substantially all of the fair value of the asset. Considering only the above information, what amount of total lease-related expense should Bolero report in its December 31, 2019 Income Statement?