On January 1, 2018, ABC Company leased equipment from Young Leasing Company. The
ID: 2461679 • Letter: O
Question
On January 1, 2018, ABC Company leased equipment from Young Leasing Company. The term of the lease is ten years and requires payments of $100,000 every January 1, with the first payment being due on January 1, 2018. The interest rate on the lease is 10%. Assume the lease is classified as a capital lease and the leased asset will be depreciated using the double-declining balance method.
Calculate the amount of accumulated depreciation related to the leased asset that would be shown in ABC Company's December 31, 2019 balance sheet. Enter your answer with two places after the decimal point (i.e., $123,987.60).
You will need to use the time value of money factors posted in carmen to answer this question.
Explanation / Answer
Calculation of the depreciation Expense Total Cost of equipment 100000*10 1000000 Depreciation per year as per straight line 1000000/10 100000 per year For 2018 100000 2019 100000 Total 200000 The accumulated depreciation will be $ 200000