On January $1$st$,20$X$9,$ ABC Inc. $($the lessor$)$ agrees to lease a piece of a specialized piece of machinery to DEF Inc. $($the lessee$)$ for $5$ years. ABC Inc. is a financial intermediary specializing in leasing arrangements such as the one described below. Details are as follows:

$$ Fair value of machinery at the inception of the lease: $$100,000.$

$$ Lease term: $5$ years $($no bargain renewal terms$).$

$$ Executory costs of $$10,000$ are reimbursed by the lessee.

$5$ Annual lease payments of $$23,000$ each are made on January $1$st of each year starting on January $1$st$,20$X$9.$

$$ Bargain purchase option at end of lease: $$5,000.$ It is estimated that the equipment will have a fair value of $$10,000$ at the end of the lease.

$$ Economic life of the asset is $10$ years, after which the equipment will be worthless. Straight$-$line depreciation applies.

$$ ABC's implicit interest rate with respect to this lease is $10\%.$ This rate is known by DEF Inc.

$$ DEF Inc.$\text{'}$s incremental borrowing rate is $9\%.$

Assuming that this qualifies as a capital lease, what would be the amount of DEF Inc.$\text{'}$s annual depreciation as per ASPE $($rounded$)?$

Question $43$Select one:

a$.$

$$5,000$

b$.$

$$10,076$

c$.$

$$10,000$

d$.$

$$9,901$