Multiple Choice
Mercury Package Express Service properly capitalized at $93,598 a large truck it had leased on January 1,2014.The truck has a 14-year useful life.Title to the truck passes to Mercury at the end of the 12-year lease term.Mercury depreciates other similar trucks on the straight-line method with no salvage value.The lease agreement calls for annual payments of $11,500 at the beginning of each year of the lease term.The interest rate implicit in the lease (which is known by the lessee) is 8%. How much depreciation and interest expense should Mercury record for 2015?
Depreciation Interest
Expense Expense
A) $7,803 $6,568
B) $6,686 $6,568
C) $6,686 $6,173
D) $7,830 $6,173
Correct Answer:
Verified
Correct Answer:
Verified
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