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What is the outstanding balance of the lease liability

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Reference no: EM132753223

Technoid Inc. sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2018. The manufacturing cost of the computers was $17 million.

This noncancelable lease had the following terms:

  1. Lease payments: $2,590,091 semiannually; first payment at January 1, 2018; remaining payments at June 30 and December 31 each year through June 30, 2022.
  2. Lease term: 5 years (10 semi-annual payments).
  3. No residual value; no purchase option.
  4. Economic life of equipment: 5 years.
  5. Implicit interest rate and lessee's incremental borrowing rate: 5% semiannually.
  6. Fair value of the computers at January 1, 2018: $21 million.

Problem 1: What is the outstanding balance of the lease liability in Lone Star's June 30, 2018, balance sheet?

Reference no: EM132753223

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