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What amount should jessie recognize as depreciation

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Reference no: EM132083536

On January 1, Jessi Co. (lessee) entered into a 5-year lease for equipment. Jessie accounted for the acquisition as a capital lease for $120,000, which included a $5,000 bargain purchase option. At the end of the lease, Jessie expects to exercise the bargain purchase option. Jessie estimates that the equipment's fair value will be $10,000 at the end of its 8-year life.

Jessie regularly uses straight-line depreciation on similar equipment. For the year ended December 31, what amount should Jessie recognize as depreciation of the asset recorded under the capital lease?

Reference no: EM132083536

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