Question: echnoid Inc. sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2018. The manufacturing cost of the computers was $21 million.

echnoid Inc. sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2018. The manufacturing cost of the computers was $21 million. This noncancelable lease had the following terms:

Lease payments: $3,326,577 semiannually; first payment at January 1, 2018; remaining payments at June 30 and December 31 each year through June 30, 2022.

Lease term: 5 years (10 semi-annual payments).

No residual value; no purchase option.

Economic life of equipment: 5 years.

Implicit interest rate and lessee's incremental borrowing rate: 7% semiannually.

Fair value of the computers at January 1, 2018: $25 million.

What is the outstanding balance of the lease liability in Lone Star's June 30, 2018, balance sheet? (Round your answer to the nearest dollar.)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!