Technoid Inc. sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2021. The manufacturing cost of the computers was $12 million. This noncancelable lease had the following terms: • Lease payments: $2,466,754 semiannually; fırst payment at January 1, 2021; remaining payments at June 30 and December 31 each year through June 3O, 2025. Fair value of the lease payments is $20 million. • Lease term: five years (10 semiannual payments). • No residual value; no purchase option. • Economic life of equipment: five years. • Implicit interest rate and lessee's incremental borrowing rate: 5% semiannually. What is the interest revenue that Technoid would report for this lease in its 2021 income statement? 1. A) $0. 2. B) $1,673,820. 3. C) $876,662. 4. D) None of these answer choices is correct. O A O B O D
Technoid Inc. sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2021. The manufacturing cost of the computers was $12 million. This noncancelable lease had the following terms: • Lease payments: $2,466,754 semiannually; fırst payment at January 1, 2021; remaining payments at June 30 and December 31 each year through June 3O, 2025. Fair value of the lease payments is $20 million. • Lease term: five years (10 semiannual payments). • No residual value; no purchase option. • Economic life of equipment: five years. • Implicit interest rate and lessee's incremental borrowing rate: 5% semiannually. What is the interest revenue that Technoid would report for this lease in its 2021 income statement? 1. A) $0. 2. B) $1,673,820. 3. C) $876,662. 4. D) None of these answer choices is correct. O A O B O D
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 3E: Lessee Accounting Issues Sax Company signs a lease agreement dated January 1, 2019, that provides...
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