Technoid Incorporated sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2024. The manufacturing cost of the computers was $17 million.This noncancelable lease had the following terms:Lease payments: $2,691,724 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: 6% semiannually.Fair value of the computers on January 1, 2024: $21 million.What is the interest revenue that Technoid would report for this lease in its income statement for the year ended December 31, 2024?Note: Round your answer to the nearest whole dollar.Multiple Choice $0 $2,101,400 $1,098,497 None of these answer choices is correct.

It is the amount earned on lending amount. Interest revenue is determined by multiplying the…

Answered: Technoid Incorporated sells computer…

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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Technoid Incorporated sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2024. The manufacturing cost of the computers was $17 million.

This noncancelable lease had the following terms:

Lease payments: $2,691,724 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: 6% semiannually.
Fair value of the computers on January 1, 2024: $21 million.

What is the interest revenue that Technoid would report for this lease in its income statement for the year ended December 31, 2024?

Note: Round your answer to the nearest whole dollar.Multiple Choice

$0
$2,101,400
$1,098,497
None of these answer choices is correct.

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