Consider the following scenario:Lucy Shafer wants to borrow $100000 to expand her dog-breeding business. She is preparing a set of financial statements to take to the local bank with her loan application. She currently has an outstanding loan from her uncle for $50000. Lucys uncle is allowing her to borrow the money at a very low interest rate and she does not have to make any principal payments for 5 years. Due to the favorable terms of her loan from her uncle Lucy has decided that it is not significant enough to disclose on her financial statements. Instead Lucy has classified the $50000 as contributed capital (equity) and the interest payments are included in miscellaneous expenses on the companys income statement.Respond to the following questions:
