Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Pharoah Corporation is a machinery dealer whose shares trades on the TSX, and so it uses IFRS. Pharoah leased a machine to Ernst Ltd. on
Pharoah Corporation is a machinery dealer whose shares trades on the TSX, and so it uses IFRS. Pharoah leased a machine to Ernst Ltd. on January 1, 2023. The lease is for a six-year period and requires equal annual payments of $24,789 at the beginning of each year. The first payment is received on January 1,2023 . Pharoah had purchased the machine for its inventory during 2022 for $99,400. Collectibility of lease payments is reasonably predictable, and no important uncertainties exist about costs that have not yet been incurred by Pharoah. Pharoah set the annual rental amount to ensure an 11% rate of return. The machine has an economic life of six years, with no residual value, and reverts to Pharoah at the termination of the lease. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE. (a) Using (1) time value of money tables, (2) a financial calculator, or (3) Excel functions, calculate the amount of each of the following: (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275.) 1. Gross investment 2. Unearned interest income 3. Net investment in the lease $ $ $ eTextbook and Media List of Accounts Attempts: 1 of 3 used Using multiple attempts will impact your score. Prepare all necessary journal entries for Pharoah for 2023. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem. Round answers to 0 decimal places, e.g. 5,275.) Date
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started