QA

A lease is purchased on 1st April, 2014 for 4 years at a cost of $ 2,00,000. It is proposed to depreciate the lease by the annuity method charging 5 percent interest. A reference to the annuity table shows that to depreciate $1 by annuity method over 4 years charging 5% interest, one must write off a sum of $ 0.282012 [T o write off $ 2,00,000 one has to write off every year $ 5,6402.40 i.e. 0.282012 2,00,000]. You are required to show the Lease Account for four years (2014-15 to 2017-18) and also the relevant entries posted to the profit and loss account.