Using the data of Example 4, allocate the receivable from finance lease as to finance income and reduction in principal amount of the receivables to be recognized by the lessor over the lease term of four years.

Data from Example 4

Jagat Limited (JL), a lease finance company, leased a transport vehicle to Zig-Zag Transport Company (ZRL) the initial cost of the vehicle on April 1, 2008 is ₹12,00,000. The lessee, ZRL has agreed to pay equated lease rent at the end of each of the year over next four years. At the end of the lease term, ZRL has the option to buy the vehicle at an estimated residual value of ₹1,50,000. The agreement of lease provides that either ZRL will buy the vehicle at the end or will arrange for an alternate buyer to buy the vehicle at the estimated residual value. The commercial rate of interest applicable for the lessor is 12% per annum. Estimate minimum lease rent acceptable to the lessor. Also calculate gross and net investment.