Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Technoid Inc. sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2021. The manufacturing cost of the computers was $21 million.

Technoid Inc. sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2021. The manufacturing cost of the computers was $21 million. This noncancelable lease had the following terms:

  • Lease payments: $3,573,855 semiannually; first payment at January 1, 2021; remaining payments at June 30 and December 31 each year through June 30, 2025.
  • Lease term: 5 years (10 semiannual payments).
  • No residual value; no purchase option.
  • Economic life of equipment: 5 years.
  • Implicit interest rate and lessee's incremental borrowing rate: 9% semiannually.
  • Fair value of the computers at January 1, 2021: $25 million.

What is the interest revenue that Technoid would report for this lease in its 2021 income statement?

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_2

Step: 3

blur-text-image_3

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

Bookkeeping And Accounting For Beginners

Authors: D.K. Livingston

1st Edition

1686248598, 978-1686248597

More Books

Students also viewed these Accounting questions

Question

The model in Exercise 28 starting from (200, 300).

Answered: 1 week ago

Question

Discuss how technology impacts HRD evaluation

Answered: 1 week ago