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Maxwell Inc. sells computer systems. Maxwell leases computers to Poodle Company on January 1, 2024. The manufacturing cost of the computers was $12 million.
Maxwell Inc. sells computer systems. Maxwell leases computers to Poodle Company on January 1, 2024. 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, 2024; remaining payments at June 30 and December 31 each year through June 30, 2028. 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, 2024: $20 million. 4. Maxwell would account for this as: 5. What is the interest revenue that Maxwell would report for this lease in its 2025 income statement?
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Answer 4 Maxwell would account for this lease as a finance lease since it meets the criteria for ...Get Instant Access to Expert-Tailored Solutions
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