[KuanW]

Hello everyone,

I’m currently using both ROGER CPA and Ninja to prepare for my FAR exam, and I noticed both courses have one same practice MCQ but have different answers. Could someone please help explain?

Here is the question:
On January 1 of the current year, Nori Mining Co. (lessee) entered into a 5-year lease for drilling equip­ment. Nori accounted for the acquisition as a finance lease for $240,000, which includes a $10,000 option. At the end of the lease, Nori expects to exercise the purchase option. Nori esti­mates that the equipment’s fair value will be $20,000 at the end of its 8-year life. Nori regularly uses straight-line depreciation on similar equipment. For the current year ended December 31, what amount should Nori recognize as depreciation expense on the leased ROU asset?

The correct answer shown on Ninja is $27500 as it takes fair value of $20,000 into account; however, on the other hand, the Roger CPA’s answer is $30000 as it doesn’t include the fair value of $20000.

Which one is correct? Please kindly advise.

Thanks.