Company: MNTR
Filing Date: 2025-08-13
Form Type: 10-Q
Source: 0001493152-25-011889
Chunk: 20

Company: Mentor Capital, Inc.
Filing Date: 2025-08-13
Form: 10-Q
Item: Item 1
Chunk 20
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4. See Note
3.

Revenue
recognition

The
Company recognizes revenue in accordance with ASC 606, “Revenue from Contracts with Customers,” and FASB ASC Topic
842, “Leases.” Revenue for our former discontinued operation was recognized net of allowances for returns and any
taxes collected from customers, which are subsequently remitted to government authorities.

The
discontinued operation that we sold on October 4, 2023, worked with business park owners, governmental centers, and apartment complexes
to reduce facilities-related costs. Our discontinued operation performed monthly services pursuant to agreements with customers. Customer
monthly service fees were based on our discontinued operation’s assessment of the amount and frequency of monthly services requested
by a customer. Our discontinued operation may have also provided additional services, such as apartment cleanout services, large item
removals, or similar services, on an as-needed basis at an agreed-upon rate as requested by customers. All services were invoiced and
recognized as revenue in the month the agreed-on services were performed.

For
each finance lease, the Company recognized as a gain the amount equal to (i) the net investment in the finance lease less (ii) the net
book value of the equipment at the inception of the applicable lease. At lease inception, we capitalized the total minimum finance lease
payments receivable from the lessee, the estimated unguaranteed residual value of the equipment at lease termination, if any, and the
initial direct costs related to the lease, less unearned income. Unearned income was recognized as finance income over the term of the
lease using the effective interest rate method.

The
Company, through its subsidiary Mentor Partner I, LLC, was the lessor of manufacturing equipment subject to leases under master leasing
agreements. The leases contained an element of dealer profit and lessee bargain purchase options at prices substantially below the subject
assets’ estimated residual values at the exercise date for the options. Consequently, the Company classified the leases as sales-type
leases (the “finance leases”) for financial accounting purposes. For such finance leases, the Company reported the discounted
present value of (i) future minimum lease payments (including the bargain purchase option, if any) and (ii) any residual value not subject
to a bargain purchase option as a finance lease receivable on its balance sheet and accrued interest on the balance of the finance lease
receivable based on the interest rate inherent in the applicable lease over the term of the lease. For each finance