1. Technoid Inc. sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2016. The manufacturing cost of the computers was $19 million. This non-cancelable lease had the following terms: Lease payments: $3,287,947 semiannually; first payment at January 1, 2016; remaining payments at June 30 and December 31 each year through June 30, 2020. Lease term: 5 years (10 semi-annual payments). No residual value; no bargain purchase option. Economic life of equipment: 5 years. Implicit interest rate and lessee's incremental borrowing rate: 9% semi-annually. Fair value of the computers at January 1, 2016: $23 million. Collectibility of the rental payments is reasonably assured, and there are no lessor costs yet to be incurred. What is the interest revenue that Technoid would report on this lease in its 2016 income statement?

2. . On December 31, 2016, Perry Corporation leased equipment to Admiral Company for a five-year period. The annual lease payment, excluding executory costs is $45,000. The interest rate for this lease is 12%. The payments are due on December 31 of each year. The first payment was made on December 31, 2016. The normal cash price for this type of equipment is $165,000 while the cost to Perry was $141,000. For the year ended December 31, 2016, by what amount will Perry's pretax earnings increase from this lease?

2.