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Technoid Inc. sells computer systems. Technoid leases computers to Lone Star Company on January 1,...

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Accounting

Technoid Inc. sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2018. The manufacturing cost of the computers was $19 million. This noncancelable lease had the following terms:

Lease payments: $3,173,776 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: 8% semiannually.

Fair value of the computers at January 1, 2018: $23 million.

What is the interest revenue that Technoid would report for this lease in its 2018 income statement? (Round your answer to the nearest dollar.)

Multiple Choice

$0.

$3,045,182.

$1,616,102.

None of these answer choices is correct.

Answer & Explanation Solved by verified expert
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