On January 1, 2020, May Comprehensive Din Company leased to another entity a Machinery, the Lease is treated as Direct Financing Lease

Cost of the Asset3,787,377.91

Unguaranteed Residual Value400,000

Useful Life and Lease Term4 Years

Implicit Rate 10%

PV of Ordinary Annuity of 10% for 4 Periods 3.1699

PV of Annuity Due of 10% for 4 periods 3.4869

PV of 1 for 10% for 4 periods 0.6830

PV of 1 for 10% for 3 periods 0.7513

Payment starts on January 1, 2020

1.What is the Annual Rental of the Finance Lease?

2.What is the Amount of Gross Investment?

3.What is the Unearned Interest Income to be recognized?