Technoid Inc. sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2018. The manufacturing cost of the computers was $18 million.

This noncancelable lease had the following terms:

Lease payments: $2,503,953 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 semiannual payments).

No residual value; no purchase option.

The economic life of the equipment: 5 years.

Implicit interest rate and lessee's incremental borrowing rates%

Fair value of the computers at January 1, 2018: $20 million. 

semiannually

 2) Technoid would account for this as:

A) A finance lease.

B) A sales-type lease without selling profit.

C) A sales-type lease with selling profit.

D) An operating lease.

3) What is the interest revenue that Technoid would report for this lease in its 2018 income statement?

A) $0.

B) $1,673,820

C) 5876,662

Answer rating: 100% (QA)

Answer 2 A sale type lease with selling profit Explanation A sa... View the full answer