Question
Technoid Inc. sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2018. The manufacturing cost of the computers was $130,000. This
Technoid Inc. sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2018. The manufacturing cost of the computers was $130,000.
This noncancelable lease had the following terms:
Lease payments: $23,000 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.
What is the outstanding balance of the lease liability in Lone Star's December 31, 2018, balance sheet? Round your answer to the nearest dollar.
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