The cash payment is debited in the interest expense account but if I debit the interest expense account with the annual cash payment of the lease then why the finance costs figure comes incorrect
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You need to understand the correct treatment of the lease and the lease liability table to calculate the annual finance cost. I think you might be looking at a question where the annual payment has been incorrectly charged as a finance cost and you are then required to correct it by removing the payment from the finance cost and using it to reduce the lease liability before then calculating the correct finance cost.
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