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What amount christmas recognize as depreciation expense

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Q1. On January 1, 2021, CHRISTMAS Company (lessee) entered into a 5-year lease for drilling equipment. CHRISTMAS accounted for the acquisition as a finance lease for 2,400,000, which includes a 100,000 purchase option that is reasonably certain to be exercised. CHRISTMAS estimates that the fair value of will be 200,000 at the end of its 8-year economic life. CHRISTMAS regularly uses the straight-line depreciation on similar equipment. For the year ended December 31, 2021, what amount should CHRISTMAS recognize as depreciation expense on the leased asset?

a. 300,000

b. 275,000

c. 460,000

d. 480,000

Q2. On January 1, 2019, KRIS KRINGLE Company purchased a 600,000 machine, with a five-year useful life and no residual value. The machine was depreciated by an accelerated method for book and tax purposes. The carrying amount was 240,000 on December 31, 2020. On January 1, 2021, the entity changed to the straight-line method for financial reporting purposes. The income tax rate is 30%. On January 1, 2021, what amount should be reported as deferred tax liability as a result of the change?

a. 120,000

b. - 0 -

c. 72,000

d. 36,000

Reference no: EM133076840

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