-On January 1, 2016, Justin Corp. leased equipment under a five-year lease with payments of $20,000 on each December 31 of the lease period. The present value of the lease payments is $77,800, using a market interest rate of 9%. Justin depreciates its equipment straight-line over 5 years with zero salvage value. The capital lease criteria are met. Calculate depreciation expense for 2016.
Definitions:
Book Value
The value of a company's asset as it appears on the balance sheet, calculated as the cost of the asset minus accumulated depreciation.
Merchandise Inventory
Goods or products that a retailer, wholesaler, or distributor holds for the purpose of selling to customers.
Gain on Realization
Profit recognized from selling an asset for more than its book value.
Loss or Gain
The financial result from business transactions, investments or other financial events, indicating a profit (gain) or a deficit (loss).
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