Equipment was purchased for $300000. Freight charges amounted to $14000 and there was a cost of $40000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $60000 salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be

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The total cost of the equipment is the purchase price plus freight charges plus installation costs, which equals $300,000 + $14,000 + $40,000 = $354,000. The salvage value at the end of its useful life is $60,000. The depreciable base is the total cost minus the salvage value, $354,000 - $60,000 = $294,000. Using the straight-line method over a 5-year period, the annual depreciation expense is $294,000 / 5 = $58,800.

Equipment Was Purchased for $300000