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Technoid Inc. sells computer systems, Technold leases computers to Lone Star Company on January 1, 2018. The manufacturing cost of the computers was $12 million.
Technoid Inc. sells computer systems, Technold leases computers to Lone Star Company on January 1, 2018. 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, 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. Fair value of the computers at January 1, 2018: $20 million Lone Star Company would debit Right-of-use-Asset and credit Lease liability for this amount: A) $20,000,000 B) $19,047,608 C) 532,577,927 D) $24, 667,540
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