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