Maxwell Inc. sells computer systems. Maxwell leases computers to Poodle Company on January 1, 2024. The...

 
  

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Maxwell Inc. sells computer systems. Maxwell leases computers to Poodle Company on January 1, 2024. 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, 2024; remaining payments at June 30 and December 31 each year through June 30, 2028. 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, 2024: $20 million. 4. Maxwell would account for this as: 5. What is the interest revenue that Maxwell would report for this lease in its 2025 income statement? Maxwell Inc. sells computer systems. Maxwell leases computers to Poodle Company on January 1, 2024. 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, 2024; remaining payments at June 30 and December 31 each year through June 30, 2028. 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, 2024: $20 million. 4. Maxwell would account for this as: 5. What is the interest revenue that Maxwell would report for this lease in its 2025 income statement?

Answer rating: 100% (QA)

Answer 4 Maxwell would account for this lease as a finance lease since it meets the criteria for ... View the full answer