James Co. leased machinery from Jim Inc. for a 5-year term. Information about the life of the asset is as follows:

Economic useful life6 years

Depreciable life for tax7 years

James Co. can purchase the machinery at the end of the lease for its fair market value on the last day of the lease. What is the depreciable life of the machinery for purposes of James Co.'s financial reports?

a.Zero years

b.Five years

c.Size years

d.Seven years