Technoid Incorporated sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2024. The manufacturing cost of the computers was $20 million. This noncancelable lease had the following terms: Lease payments: $2,731,585 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: 3% semiannually. Fair value of the computers on January 1, 2024: $24 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 3E: Lessee Accounting Issues Sax Company signs a lease agreement dated January 1, 2019, that provides...
icon
Related questions
Question

Rr.9.

Technoid Incorporated sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2024. The
manufacturing cost of the computers was $20 million. This noncancelable lease had the following terms: Lease payments:
$2,731,585 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: 3% semiannually. Fair value of the
computers on January 1, 2024: $24 million. What is the outstanding balance of the lease liability in Lone Star's balance
sheet on June 30, 2024?
Transcribed Image Text:Technoid Incorporated sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2024. The manufacturing cost of the computers was $20 million. This noncancelable lease had the following terms: Lease payments: $2,731,585 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: 3% semiannually. Fair value of the computers on January 1, 2024: $24 million. What is the outstanding balance of the lease liability in Lone Star's balance sheet on June 30, 2024?
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 2 images

Blurred answer
Knowledge Booster
Lease accounting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Financial Accounting Intro Concepts Meth/Uses
Financial Accounting Intro Concepts Meth/Uses
Finance
ISBN:
9781285595047
Author:
Weil
Publisher:
Cengage
CONCEPTS IN FED.TAX., 2020-W/ACCESS
CONCEPTS IN FED.TAX., 2020-W/ACCESS
Accounting
ISBN:
9780357110362
Author:
Murphy
Publisher:
CENGAGE L