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1.Technoid Inc. sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2021. The manufacturing cost of the computers was $17 million.
1.Technoid Inc. sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2021. The manufacturing cost of the computers was $17 million. This noncancelable lease had the following terms:
- Lease payments: $2,794,325 semiannually; first payment at January 1, 2021; remaining payments at June 30 and December 31 each year through June 30, 2025.
- Lease term: 5 years (10 semiannual payments).
- No residual value; no purchase option.
- Economic life of equipment: 5 years.
- Implicit interest rate and lessee's incremental borrowing rate: 7% semiannually.
- Fair value of the computers at January 1, 2021: $21 million.
What is the outstanding balance of the lease liability in Lone Star's June 30, 2021, balance sheet? (Round your answer to the nearest whole dollar.)
a.$16,585,756.
b.$16,685,747.
c.$21,000,000.
d.None of these answer choices is correct.
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