Reference no: EM132758703
Question - 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:
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.
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: 5% semiannually.
Fair value of the computers at January 1, 2018: $21 million.
Required - What is the outstanding balance of the lease liability in Lone Star's June 30, 2018, balance sheet?
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