Question
On January 2, 2018, Nori Mining Co. (lessee) entered into a 5-year lease for drilling equipment. Nori accounted for the acquisition as afinance lease for
On January 2, 2018, Nori Mining Co. (lessee) entered into a 5-year lease for drilling equipment. Nori accounted for the acquisition as afinance lease for $205,000, which includes a $39,100 purchase option. At the end of the lease, Nori is reasonably certain to exercise the purchase option. Nori estimates that the equipment's fair value will be $49,900 at the end of its 8-year life. Nori regularly uses straight-line depreciation on similar equipment. For the year ended December 31, 2018, what amount should Nori recognize asamortization expense on the leased asset?
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