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The John-Jacob Manufacturing Co. is leasing a piece of equipment for 5 years. The annual lease payment is $25,000. The rate implicit in the lease

The John-Jacob Manufacturing Co. is leasing a piece of equipment for 5 years. The annual lease payment is $25,000. The rate implicit in the lease is 12% and the present balance of the lease payments is $90,500. This is a non-cancelable lease where the equipment can be purchased at the end of the lease term for $1.

16. What is the first-year depreciation expense account (12 months)?

a. $18,100

b. $25,000

c. $15,000

d. $20,100

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