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What is the amount of depreciation expense

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Question - Firm A leases equipment from Firm B for 7 years. Firm A will pay $5,000 at the end of every year for the next 7 years. Assume that the discount rate of Firm A is 8%. Also assume that the lease term and the useful life of the equipment are the same. The present value of the equipment lease payments at the inception of the lease is $26,032. What is the amount of depreciation expense to be recorded by Firm A for the first year of the lease if Firm A uses the straight line depreciation method?

Reference no: EM133126436

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