PW entered into a contract to acquire the right to use an item of plant for a period of three years from 1 April 20X7. The contract meets the definition of a lease under IFRS 16 Leases. The present value of the future lease payments on commencement of the lease was $15,462,000, which is also the initial carrying amount of the right of use asset. PW will make three rental payments of $6 million per annum which are due to be paid in arrears on 31 March each year, commencing on 31 March 20X8. The useful life of the plant is deemed to be five years. There is no option to buy the plant at the end of the lease term. The interest rate implicit in the lease is 8% per annum. What is the total charge to profit or loss in respect of this lease at 31 March 20X8?

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To calculate the total charge to profit or loss in respect of this lease at 31 March 20X8 unde... View the full answer