Ivanhoe Corporation is a machinery dealer whose shares trades on the TSX, and so uses IFRS 16. Ivanhoe leased a machine to Ernst Ltd. on January 1, 2017. The lease is for a six-year period and requires equal annual payments of $24,959 at the beginning of each year. The first payment is received on January 1, 2017. Ivanhoe had purchased the machine for its inventory during 2016 for $100,900. Collectibility of lease payments is reasonably predictable, and no important uncertainties exist about costs that have not yet been incurred by Ivanhoe. Ivanhoe set the annual rental amount to ensure an 12% rate of return. The machine has an economic life of six years, with no residual value, and reverts to Ivanhoe at the termination of the lease.

A)Using time value of money tables, a financial calculator, or Excel functions, calculate the amount of each of the following:

gross investment:

unearned intrest income:

net investment in lease:

B)Prepare all necessary journal entries for Ivanhoe for 2017.

(n =6

rate of return =12%

1.97382)