TABLE PV.1 Present Value of 1 (n) periods 2% 212% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 15% 1 0.98039 0.97561 0.97087 0.96156 0.95238 0.94340 0.93458 0.92593 0.91743 0.90909 0.90090 0.89286 0.86957 2 0.96117 0.95181 0.94260 0.92456 0.90703 0.89000 0.87344 0.85734 0.84168 0.82645 0.81162 0.79719 0.75614 3 0.94232 0.92860 0.91514 0.88900 0.86384 0.83962 0.81630 0.79383 0.77218 0.75132 0.73119 0.71178 0.65752 4 0.92385 0.90595 0.88849 0.85480 0.82270 0.79209 0.76290 0.73503 0.70843 0.68301 0.65873 0.63552 0.57175 5 0.90583 0.88385 0.86261 0.82193 0.78353 0.74726 0.71299 0.68058 0.64993 0.62092 0.59345 0.56743 0.49718 6 0.88797 0.86230 0.83748 0.79031 0.74622 0.70496 0.66634 0.63017 0.59627 0.56447 0.53464 0.50663 0.43233 7 0.87056 0.84127 0.81309 0.75992 0.71068 0.66506 0.62275 0.58349 0.54703 0.51316 0.48166 0.45235 0.37594 8 0.85349 0.82075 0.78941 0.73069 0.67684 0.62741 0.58201 0.54027 0.50187 0.46651 0.43393 0.40388 0.32690 9 0.83676 0.80073 0.76642 0.70259 0.64461 0.59190 0.54393 0.50025 0.46043 0.42410 0.39092 0.36061 0.28426 10 0.82035 0.78120 0.74409 0.67556 0.61391 0.55839 0.50835 0.46319 0.42241 0.38554 0.35218 0.32197 0.24719 11 0.80426 0.76214 0.72242 0.64958 0.58468 0.52679 0.47509 0.42888 0.38753 0.35049 0.31728 0.28748 0.21494 12 0.78849 0.74356 0.70138 0.62460 0.55684 0.49697 0.44401 0.39711 0.35554 0.31863 0.28584 0.25668 0.18691 13 0.77303 0.72542 0.68095 0.60057 0.53032 0.46884 0.41496 0.36770 0.32618 0.28966 0.25751 0.22917 0.16253 14 0.75788 0.70773 0.66112 0.57748 0.50507 0.44230 0.38782 0.34046 0.29925 0.26333 0.23199 0.20462 0.14133 15 0.74301 0.69047 0.64186 0.55526 0.48102 0.41727 0.36245 0.31524 0.27454 0.23939 0.20900 0.18270 0.12289 16 0.72845 0.67362 0.62317 0.53391 0.45811 0.39365 0.33873 0.29189 0.25187 0.21763 0.18829 0.16312 0.10687 PRESENT VALUE OF AN ANNUITY DUE OF 1 1 (1+i)-1 PVF-AD, = 1+ i (n) periods 2% 21/2% 3% 4% 6% 8% 9% 10% 11% 12% 15% 1 2 3 4 5 1.00000 1.98039 2.94156 3.88388 4.80773 1.00000 1.97561 2.92742 3.85602 4.76197 1.00000 1.97087 2.91347 3.82861 4.71710 1.00000 1.96154 2.88609 3.77509 4.62990 5% 1.00000 1.95238 2.85941 3.72325 4.54595 1.00000 1.94340 2.83339 3.67301 4.46511 1.00000 1.92593 2.78326 3.57710 4.31213 1.00000 1.91743 2.75911 3.53130 4.23972 1.00000 1.00000 1.00000 1.00000 1.90909 1.90090 1.89286 1.86957 2.73554 2.71252 2.69005 2.62571 3.48685 3.44371 3.40183 3.28323 4.16986 4.10245 4.03735 3.85498 6 7 8 9 10 5.71346 6.60143 7.47199 8.32548 9.16224 5.64583 6.50813 7.34939 8.17014 8.97087 5.57971 6.41719 7.23028 8.01969 8.78611 5.45182 5.32948 6.24214 6.07569 7.00205 6.78637 7.73274 7.46321 8.43533 8.10782 5.21236 5.91732 6.58238 7.20979 7.80169 4.99271 5.62288 6.20637 6.74664 7.24689 4.88965 5.48592 6.03295 6.53482 6.99525 4.79079 4.69590 4.60478 4.35216 5.35526 5.23054 5.11141 4.78448 5.86842 5.71220 5.56376 5.16042 6.33493 6.14612 5.96764 5.48732 6.75902 6.53705 6.32825 5.77158 11 12 13 14 15 9.98259 9.75206 10.78685 10.51421 11.57534 11.25776 12.34837 11.98319 13.10625 12.69091 9.53020 10.25262 10.95400 11.63496 12.29607 9.11090 8.72173 8.36009 9.76048 9.30641 8.88687 10.38507 9.86325 9.38384 10.98565 10.39357 9.85268 11.56312 10.89864 10.29498 7.71008 8.13896 8.53608 8.90378 9.24424 7.41766 7.80519 8.16073 8.48690 8.78615 7.14457 6.88923 6.65022 6.01877 7.49506 7.20652 6.93770 6.23371 7.81369 7.49236 7.19437 6.42062 8.10336 7.74987 7.42355 6.58315 9.36669 7.98187 7.62817 6.72448 16 17 18 19 20 13.84926 13.38138 12.93794 12.11839 11.37966 10.71225 9.55948 14.57771 14.05500 13.56110 12.65230 11.83777 11.10590 9.85137 15.29187 14.71220 14.16612 13.16567 12.27407 11.47726 10.12164 15.99203 15.35336 14.75351 13.65930 12.68959 11.82760 10.37189 16.67846 15.97889 15.32380 14.13394 13.08532 12.15812 10.60360 9.06069 9.31256 9.54363 9.75563 9.95012 8.60608 8.19087 7.81086 6.84737 8.82371 8.37916 7.97399 6.95424 9.02155 8.54879 8.11963 7.04716 9.20141 8.70162 8.24967 7.12797 9.36492 8.83929 8.36578 7.19823 21 22 23 17.35143 16.58916 18.01121 17.18455 18.65805 17.76541 15.87747 14.59033 13.46221 12.46992 10.81815 10.12855 16.41502 15.02916 13.82115 12.76408 11.01680 10.29224 16.93692 15.45112 14.16300 13.04158 11.20074 10.44243 9.51356 8.96333 8.46944 7.25933 9.64869 9.07507 8.56200 7.31246 9.77154 9.17574 8.64465 7.35866 Exercise 20-17 Sandhill Corporation is a machinery dealer whose shares trades on the TSX, and so it uses IFRS 16. Sandhill leased a machine to Ernst Ltd. on January 1, 2020. The lease is for a six-year period and requires equal annual payments of $24,879 at the beginning of each year. The first payment is received on January 1, 2020. Sandhill had purchased the machine for its inventory during 2019 for $100,800. Collectibility of lease payments is reasonably predictable, and no important uncertainties exist about costs that have not yet been incurred by Sandhill. Sandhill set the annual rental amount to ensure an 10% rate of return. The machine has an economic life of six years, with no residual value, and reverts to Sandhill 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. Using time value of money tables, a financial calculator, or 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 o decimal places, e.g. 5,275.) 1. Gross investment 2. Unearned interest income $ 3. Net investment in the lease $ Prepare all necessary journal entries for Sandhill for 2020. (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 o for the amounts. Round answers to o decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit 1/1/20 (To record inception of lease and cost of goods sold.) (To record interest.)