Question: Technoid Inc. sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2013. The manufacturing cost of the computers was $17 million.
Technoid Inc. sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2013. The manufacturing cost of the computers was $17 million. |
This non-cancelable lease had the following terms: |
Lease payments: $2,590,091 semiannually; first payment at January 1, 2013; remaining payments at June 30 and December 31 each year through June 30, 2017. | |
Lease term: 5 years (10 semi-annual payments) | |
No residual value; no bargain purchase option | |
Economic life of equipment: 5 years | |
Implicit interest rate and lessee's incremental borrowing rate: 5% semi-annually | |
Fair value of the computers at January 1, 2013: $21 million |
| Collectibility of the rental payments is reasonably assured, and there are no lessor costs yet to be incurred. |
| What is the net carrying value of the lease liability in Lone Star's June 30, 2013 balance sheet?
PLEASE SHOW STEPS THANKS |
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