How much depreciation expense should hutton record

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Question - Hutton Company signed a four-year, non-cancelable lease for certain equipment on January 1, 2017. The terms of the lease called for Hutton to make annual payments of $50,000 at the end of each year (starting on Dec. 31, 2017) for four years. Hutton will return the equipment to the lessor when the lease ends. The equipment has an estimated useful life of five years and no expected salvage value. The fair market value of the equipment was $178,248 as of January 1, 2017. Hutton applies a discount rate (interest rate) of 7% to the lease. It uses the straight-line depreciation method for all of its fixed assets. How much depreciation expense should Hutton record for the leased equipment for the year ended December 31, 2017?

Reference no: EM133169384

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