Technoid Incorporated sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2024. The manufacturing cost of the computers was $18 million. This noncancelable lease had the following terms: Lease payments: $2,819,901 semiannually; first payment on January 1, 2024; remaining payments on June 30 and December 31 each year through June 30, 2028. 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: 6% semiannually. Fair value of the computers on January 1, 2024: $22 million. What is the interest revenue that Technoid would report for this lease in its income statement for the year ended December 31, 2024? Note: Round your answer to the nearest whole dollar. Multiple Choice $0 $2,201,466 $ 1,150, 806 None of these answer choices is correct.
Technoid Incorporated sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2024. The manufacturing cost of the computers was $18 million. This noncancelable lease had the following terms: Lease payments: $2,819,901 semiannually; first payment on January 1, 2024; remaining payments on June 30 and December 31 each year through June 30, 2028. 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: 6% semiannually. Fair value of the computers on January 1, 2024: $22 million. What is the interest revenue that Technoid would report for this lease in its income statement for the year ended December 31, 2024? Note: Round your answer to the nearest whole dollar. Multiple Choice $0 $2,201,466 $ 1,150, 806 None of these answer choices is correct.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Technoid Incorporated sells computer systems.
Technoid leases computers to Lone Star Company on
January 1, 2024. The manufacturing cost of the
computers was $18 million. This noncancelable lease
had the following terms: Lease payments: $2,819,901
semiannually; first payment on January 1, 2024;
remaining payments on June 30 and December 31
each year through June 30, 2028. 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: 6% semiannually. Fair value of the
computers on January 1, 2024: $22 million. What is the
interest revenue that Technoid would report for this
lease in its income statement for the year ended
December 31, 2024? Note: Round your answer to the
nearest whole dollar. Multiple Choice $0 $2,201,466 $
1,150, 806 None of these answer choices is correct.
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