Rose Corporation is a machinery dealer whose shares trades on the TSX, and so it uses IFRS 16. Rose leased a machine to Young Ltd. on January 1, 2020. 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, 2020. Rose had purchased the machine for its inventory during 2019 for $100,100. Collectability of lease payments is reasonably predictable, and no important uncertainties exist about costs that have not yet been incurred by Rose. Rose set the annual rental amount to ensure an 9% rate of return. The machine has an economic life of six years, with no residual value, and reverts to Rose at the termination of the lease.

Required

Part # 1

Using a financial calculator, calculate the amount of each of the following:

1. Gross investment

2. Unearned interest income

3. Net investment in the lease

Part # 2

Prepare all necessary journal entries for Rose Corporation for 2020.