The price of a large piece of construction equipment purchased by Hass Construction Company was $53,500. It cost $1,275 for delivery and $2,750 for installation. The salvage value at the end of a 4-year life is $7,500. Using the straight-line depreciation method, calculate the annual depreciation for year 3.

Question

Quizplus · Accepted Answer

The total cost of the equipment includes its purchase price, delivery, and installation costs: $53,500 + $1,275 + $2,750 = $57,525. The salvage value at the end of its life is $7,500. The depreciable amount is the total cost minus the salvage value: $57,525 - $7,500 = $50,025. Using the straight-line depreciation method, the annual depreciation is the depreciable amount divided by the useful life (4 years): $50,025 / 4 = $12,506.25.

The Price of a Large Piece of Construction Equipment Purchased