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What's the interest revenue that Lithium would report for this lease in its 2018 income statement? Lithium Inc. sells computer systems. Lithium leases computers to
What's the interest revenue that Lithium would report for this lease in its 2018 income statement?
Lithium Inc. sells computer systems. Lithium leases computers to Evergreen 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
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