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What amount should bergify recognize as depreciation expense

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Question - On January 2, 2022, Bergify Co. entered into a 5-year lease contract for drilling equipment. Bergify recorded the lease liability for 2,400,000, which includes a present value of 100,000 for the purchase option. Bergify estimates that the fair value of the equipment at the end of its 8-year economic life will be 200,000. Bergify uses double-declining method of depreciating its assets.

What amount should Bergify recognize as depreciation expense on the leased asset for 2022?

A. 300,000

B. 480,000

C. 960,000

D. 600,000

Reference no: EM133188169

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