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Note 3 - Net Investment in Sales Type Lease
6 Months Ended
Jun. 30, 2021
Notes to Financial Statements  
Lessor, Sales-type Leases [Text Block]

3.

Net Investment in Sales Type Lease –

 

In January 2021, the Company entered into a five year lease with a customer for hardware which had an implied interest rate of 6%.

 

At inception, the Company recorded $210,782 in "Net investment in sales type leases" and derecognized $139,521 from “Inventory" on its condensed balance sheet. The Company recognized $71,261 in profit from sales type leases in its condensed statements of operations for the six months ended June 30, 2021 as a result of the transaction. For the three months ended June 30, 2021 the Company recognized $5,757 of interest income in the Company's condensed statements of operations

 

 

The future minimum lease payments receivable for sales type leases are as follows:

   

Amount

 

2021 (remaining six months)

  $ 24,450  

2022

    48,900  

2023

    48,900  

2024

    48,900  

2025

    48,900  

Thereafter

    4,075  

Total undiscounted cash flows

    224,125  

Present value discount

    (28,600 )

Net investment in lease as of June 30, 2021

  $ 195,525  

 

The total net investments in sales type leases, as of June 30, 2021 was $195,525. The current portion of $38,209 is included in Current Assets on the condensed balance sheet as of June 30, 2021, and the long term portion of $157,316 is included in Long-Term Assets on the condensed balance sheet as of June 30, 2021.  The lease contains a purchase option at the conclusion of the lease, which the Company has determined does not meet the probability criterion.  The Company has not recorded an unguaranteed residual asset.