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JHS Corporation is a lessee with a capital lease. The asset is recorded at $1,000,000...

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Accounting

JHS Corporation is a lessee with a capital lease. The asset is recorded at $1,000,000 and has an economic life of 10 years. The lease term is 8 years. The asset is expected to have a fair value of $300,000 at the end of 8 years, and a fair value of $100,000 at the end of 10 years. The lease agreement provides for the transfer of title of the asset to the lessee at the end of the lease term. What amount of depreciation expense would the lessee record for the first year of the lease?

a.

$87,500
b.

$70,000
c.

$80,000
d.

$90,000

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