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What amount should be depreciation expense be recorded

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Reference no: EM132881022

Melvin Company recorded the cost right of use asset at 4,500,000 The underlying asset had a useful life of 8 years and the lease term is 5 years. The asset is expected to have a fair value of 1,500,000 at the end of 5 years and a fair value of 500,000 at the end of 8 years. The lease agreement provided for the transfer of title of the underlying asset to the lessee at the end of the lease term.

Problem 1: What amount should be depreciation expense should be recorded for the first lease term?

a. 900,000

b. 800,000

c. 600,000

d. 500,000

Reference no: EM132881022

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