the machine has a useful life of twelve years with no salvage value title passes to 604627
On January 2, 2006, Cole Co. signed an eight-year noncancelable lease for a new machine, requiring $15,000 annual payments at the beginning of each year. The machine has a useful life of twelve years, with no salvage value. Title passes to Cole at the lease expiration date. Cole uses straight-line depreciation for all of its plant assets. Aggregate lease payments have a present value on January 2, 2006, of $108,000 based on an appropriate rate of interest. For 2006, Cole should record depreciation (amortization) expense for the leased machine at
- $0
- $ 9,000
- $13,500
- $15,000