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Accounting for Leases, Financial Accounting and Reporting 2, Homework Question 3 3. On 1/1/21, Minnie Corp. (lessee) signs a 5-year non-cancellable lease with Mickey Corp.
Accounting for Leases, Financial Accounting and Reporting 2, Homework Question 3
3. On 1/1/21, Minnie Corp. (lessee) signs a 5-year non-cancellable lease with Mickey Corp. (lessor) to lease machinery. The useful life of the equipment is 8 years. The lease requires annual payments on January 1st of each year. The equipment has a selling price of $600,000 and a cost of $450,000 to Mickey Corp. The expected residual value at the end of the lease term is $50,000. The equipment's expected residual value is $4,000 at the end of its useful life. The periodic lease payments are $85,000. The interest rate is 8%. How much amortization / depreciation expense is recorded by the Mickey Corp. on 12/31/21? (1 point) a. $0 b. $55,750 c. $80,000 d. $89,000 e. $92,800 Step by Step Solution
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