Question
Technoid Inc. sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2018. The manufacturing cost of the computers was $19 million.
Technoid Inc. sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2018. The manufacturing cost of the computers was $19 million.
This non-cancelable lease had the following terms:
1.) Lease payments: 3,287,947 semiannually, first payment at January 1, 2018; remaining payments at June 30 and December 31 each year through June 30, 2022
2.) Lease term: 5 years (10 semi-annual payments)
3.) No residual value; no purchase option
4.) Economic Life of equipment: 5 years
5.) Implicit interest rate and lessee's incremental borrowing rate: 9% semiannually
6.) Fair Value of the computers at January 1, 2018: $23 million
What is the interest revenue that Technoid would report for this lease in its 2018 income statement?
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