Technoid Inc. sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2018. The
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Question:
Technoid Inc. sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2018. The manufacturing cost of the computers was $20 million.
This noncancelable lease had the following terms:
- Lease payments: $3,550,809 semiannually; first payment at January 1, 2018; remaining payments at June 30 and December 31 each year through June 30, 2022.
- Lease term: 5 years (10 semi-annual payments).
- No residual value; no purchase option.
- Economic life of equipment: 5 years.
- Implicit interest rate and lessee's incremental borrowing rate: 10% semiannually.
- Fair value of the computers at January 1, 2018: $24 million.
What is the interest revenue that Technoid would report for this lease in its 2018 income statement?(Round your answer to the nearest dollar.)
Multiple Choice
- None of these answer choices is correct.
- $0.
- $2,084,923.
- $3,939,249.
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