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On 1.1.17, Jacob Inc. leased equipment from Sam Co. under a 9-year sales type lease. The equipment had cost $400,000 and an estimated useful life
On 1.1.17, Jacob Inc. leased equipment from Sam Co. under a 9-year sales type lease. The equipment had cost
$400,000 and an estimated useful life of 15 years. Semiannual lease payments of $44,000 are due every 1.1 and 7.1.
The present value of lease payments at 12% is $505,000, which equals the sales price of the equipment. Using
double declining method, what amount should Jacob recognize as depreciation on the equipment in the 2nd
year?
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