Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Bash Inc. sells computer systems. Bash leases computers to Star Company on January 1, 2018. The manufacturing cost of the computers was $12 million.

image text in transcribed

Bash Inc. sells computer systems. Bash leases computers to Star Company on January 1, 2018. The manufacturing cost of the computers was $12 million. This noncancelable lease had the following terms: Lease payments: $2,466,754 semiannually; first payment at January 1, 2018; remaining payments at June 30 and December 31 each year through June 30, 2022 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. Fair value of the computers at January 1, 2018: $20 million. Bash would account for this as (choose one): finance lease, sales-type lease without selling profit, sales-type lease with selling profit? Star would account for this as (choose one): finance lease, sales-type lease without selling profit, sales-type lease with selling profit? What is the outstanding balance of the lease liability in Star's June 30, 2018 balance sheet? Round your answer to the nearest dollar. What is the interest revenue that Bash would report for this lease in its 2018 income statement? 1673820

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Financial Reporting and Analysis

Authors: David Alexander, Anne Britton, Ann Jorissen

5th edition

978-1408032282, 1408032287, 978-1408075012

More Books

Students also viewed these Accounting questions