Dobler Company purchased factory equipment with an invoice price of $78,000. Other costs incurred were freight costs, $1,300; installation wiring and foundation, $2,200; material and labor costs in testing equipment, $700; oil lubricants and supplies to be used with equipment, $500; fire insurance policy covering equipment, $1,500. The equipment is estimated to have a $5,000 salvage value at the end of its 8-year useful service life.
Instructions
(a) Compute the acquisition cost of the equipment. Clearly identify each element of cost.
(b) If the straight-line method of depreciation was used, the annual rate applied to the depreciable cost would be __________.

Question

Quizplus · Accepted Answer

The Answer of Dobler Company purchased factory equipment with an invoice price of $78,000. Other costs incurred were freight costs, $1,300; installation wiring and foundation, $2,200; material and labor costs in testing equipment, $700; oil lubricants and supplies to be used with equipment, $500; fire insurance policy covering equipment, $1,500. The equipment is estimated to have a $5,000 salvage value at the end of its 8-year useful service life.
Instructions
(a) Compute the acquisition cost of the equipment. Clearly identify each element of cost.
(b) If the straight-line method of depreciation was used, the annual rate applied to the depreciable cost would be __________.

Dobler Company Purchased Factory Equipment with an Invoice Price of $78,000