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AAA Pte Ltd, with 31 December financial year-ends, leases out a machine to another company...

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Accounting

AAA Pte Ltd, with 31 December financial year-ends, leases out a machine to another company on 1 January 20X1 on a finance lease for three years. The machine has a fair value of $50,000. The annual fixed lease payments of $19,753 will be receivable on 31 December 20X1, 31 December 20X2, and 31 December 20X3. The implicit rate of interest is 9%. Using the effective interest method, determine the amount of interest income (rounded to the nearest dollar) earned by AAA Pte Ltd in the year ending 31 December 20X2?

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