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MC Qu. 56 Refer to the following lease amortization s... Refer to the following lease amortization schedule. The five payments are made annually starting with

MC Qu. 56 Refer to the following lease amortization s... Refer to the following lease amortization schedule. The five payments are made annually starting with the inception of the lease. A $2,000 bargain purchase option is exercisable at the end of the five-year lease. The asset has an expected economic life of eight years. Lease Payment Cash Payment Effective Interest Decrease in Balance Balance 34,600 1 8,000 ?? ?? 26,600 2 8,000 2,660 5,340 21,260 3 8,000 2,126 5,874 15,386 4 8,000 1,539 6,461 8,925 5 8,000 ?? ?? ?? 6 2,000 182 1,818 0 What would the lessee record as annual depreciation on the asset using the straight-line method, assuming no residual value? $3,325. $6,920. $4,325. $5,320.

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