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Question - On January 1, 20XX, Richardson Company leased equipment under a 3- year lease with payments of $8,000 on January 1, 20XX, 20XY, and 20XZ.
The present value of the lease payments at a discount rate of 7% is $20,992. Richardson uses straight-line depreciation with no salvage value. The lease is considered a capital lease.
Required -
a. Calculate depreciation expense for 20XX.
b. Calculate interest expense for 20XX.
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