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Fact pattern for the nine (9) independent scenarios below: On January 1,20x1, Sunset...

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Accounting

Fact pattern for the nine (9) independent scenarios below:
On January 1,20x1, Sunset Co. leased a machine from April, Inc.
Information on the lease is as follows:
Annual rent
P200,000
Lease term
10 years
Useful life of machine
12 years
Implicit interest rate
10%
Lessee's incremental borrowing rate
11%
Scenario 3: Purchase option
The lease payments are due at the beginning of each year. The
lease contract provides Sunset Co. an option to purchase the
machine at the end of the lease term for P100,000. Sunset C0. is
reasonably certain to the exercise the option. What amount of
interest expense should Sunset Co. recognize on the lease in
201?
a.139,036
b.135,181
c.119,036
d.115,181
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