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Compute the amount of unearned interest income on january

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Reference no: EM132556033

FINANCE LEASE - LESSOR (DIRECT FINANCING)

On January 1, 2020, Dandelion Corp. a finance company leased one of its buildings to Priscilla Co. under the following terms:

Cost of the building 1,268,000

Useful life 5 years

Term of the lease 4 years

Annual payments every December 31 400,000

Implicit rate of 10%

Incremental borrowing rate 12%

Requirements:

Question a. Compute the amount of gross investment for the lease.

Question b. Compute the amount of net investment for the lease.

Question c. Compute the amount of unearned interest income on January 1, 2020.

Question d. Make an amortization table for the lease.

Question e. Prepare the journal entries in the books of Dandelion Corp. for the year 2020.

Reference no: EM132556033

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