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On January 22016Nori Mining Co lessee entered into a5year lease for drilling equipment Nori accounted for theacquisition as a capital lease for $240000 which includes a$10000 bargain

On January 2, 2016, Nori Mining Co. (lessee) entered into a5-year lease for drilling equipment. Nori accounted for theacquisition as a capital lease for $240,000, which includes a$10,000 bargain purchase option. At the end of the lease, Noriexpects to exercise the bargain purchase option. Nori estimatesthat the equipment’s fair value will be $20,000 at the end of its8-year life. Nori regularly uses straight-line depreciation onsimilar equipment. For the year ended December 31, 2016, whatamount should Nori recognize as depreciation expense on the leasedasset?

Options are as follows:

$27,500

$30,000

$48,000

$46,000

 

Mar 21 2020 Read more Less More

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