On January 1, 2004, Digital, Inc. leased heavy machinery from Young Leasing Company. The terms of the lease require annual...

On January 1, 2004, Digital, Inc. leased heavy machinery from Young Leasing Company. The terms of
the lease require annual payments of $20,000 for twenty years beginning on December 31, 2004. The
interest rate on the lease is 10%. Assume the lease qualifies as a capital lease.

Calculate the amount of depreciation expense recorded by Digital, Inc. in 2006 related to the
leased asset. Assume Digital, Inc. uses the double-declining balance depreciation method. Enter
your answer with two places after the decimal point (i.e., $123,456.78).

You will need to use the time value of money factors posted in carmen to answer this question.