We assume that the lease is appropriately recorded as an operating lease by Harter.

Harter Company leased machinery to Stine Company on Jan 1, 2018, for a ten-year period expiring Jan 1, 2028. Equal annual payments under the lease are $250,000 and are due on Jan 1 of each year. The first payment was made on Jan 1, 2018. The rate of interest used by Harter and Stine is 9%. The lease receivable before the first payment is $1,750,000 and the cost of the machinery on Harter's accounting records was $1,550,000.

On 12/31/2018, does the lessor, Harter, need to record depreciation expense for the machinery?

options:

no

yes