Technold 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: $3,144,993 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: 9% semiannually. • Fair value of the computers on January 1, 2024: $22 million. What is the outstanding balance of the lease liability in Lone Star's balance sheet on June 30, 2024?
Technold 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: $3,144,993 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: 9% semiannually. • Fair value of the computers on January 1, 2024: $22 million. What is the outstanding balance of the lease liability in Lone Star's balance sheet on June 30, 2024?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 12P: Comprehensive Landlord Company and Tenant Company enter into a noncancelable, direct financing lease...
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