REQUIREMENTS:1. What is the unearned interest income on January 1,2016?2. What amount should be reported as gross profit on sale in 2016?3. What is the interest income for 2016? MON Co. Is a dealer in machinery. On January 1, 2016, a machinery was leased toanother entity with the following provisions:gular SnipAnnual rental payable at the end of each year3,000,0005 yearsLease term and useful life of machineryCost of machinery8,000,000Residual value- unguaranteed1,000,000Implicit interest rate12%PV of an ordinary annuity of 1 for 5 periods at 12%3.60PV of 1 for 5 periods at 12%0.57At the end of the lease term on Dec. 31, 2020, the machinery will revert to MON Co.MON incurred initial direct cost of P 300,000 in finalizing the lease agreement.What is the unearned interest income on January 1, 2016?

GIVEN Annual rental payable at the end of each year 3,000,000 Lease term and useful life of…

Answered: MON Co. Is a dealer in machinery. On…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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