XYZ Company Leased Equipment to West Corporation Under a Lease

Multiple Choice

XYZ Company leased equipment to West Corporation under a lease agreement that qualifies as a capital lease to West but not as a result of a bargain purchase option or a title transfer.The present value of the asset is $600,000.The expected economic life of the asset is 10 years.The lease term is five years.Using the straight-line method,what would West record as annual depreciation?

A) $120,000.
B) $61,000.
C) $60,000.
D) $0.