Note 5 - Lease Receivable

12 Months Ended

Dec. 31, 2019

Note 5 – Lease Receivable

In 2016, the Company entered into a lease agreement with a customer whereby the Company will be the Lessor and the customer will be the lessee of a Planetarium System produced, delivered and installed by the Company. The lease term is 5 years and requires the customer to make rent payments to the Company over the lease term in accordance with the fixed schedule in the agreement. The equipment will be returned to the Company at the end of the lease term at which time the Company estimates that the system will have no residual value. The customer obtained control of the leased assets upon delivery and acceptance of the system on December 7, 2016. The lease is accounted for as a sales-type lease since the lease term is for substantially all of the economic life of the system, the present value of the lease payments amounts to substantially all of the fair value of the underlying assets, and the customer will retain the control with substantially all of the risks and awards of ownership of the system. The discounted present value of the payments to be made under the lease agreement, using an annual rate of 6%, amounts to $1,754. This amount represents the fair value of the equipment of $1,678 and the maintenance services E&S is to provide over the terms of the lease valued at $76. In 2018, the Company collected $307 in lease payments of which $60 was recorded as interest income and $247 as principal reduction of the lease receivable. In 2019, the Company collected $307 in lease payments of which $44 was recorded as interest income and $263 as principal reduction of the lease receivable.

The balance of lease receivable as of December 31, 2019 and 2018 is recorded as follows:

	2019	2018

Lease receivable	$ 278	$ 262
Lease receivable long term	295	574
Total	$ 573	$ 836

- Definition

Disclosure of accounting policy for financing receivable.

+ References + Details

EVANS & SUTHERLAND COMPUTER CORP 10-K