Question

Crane Company purchased equipment on account on September 3, 2019, at an invoice price of $181,000. On September 4, 2019, it paid $3,800 for delivery of the equipment. A one-year, $1,900 insurance policy on the equipment was purchased on September 6, 2019. On September 20, 2019, Crane paid $4,200 for installation and testing of the equipment. The equipment was ready for use on October 1, 2019.

Crane estimates that the equipment's useful life will be four years, with a residual value of $6,500. It also estimates that, in terms of activity, the equipment's useful life will be 91,250 units. Crane has a September 30 fiscal year end. Assume that actual usage is as follows:

# of Units		Year Ended September 30
15,410		2020
23,710		2021
20,010		2022
33,020		2023

Determine the cost of the equipment.

Cost of equipment

$

  

  

Prepare depreciation schedules for the life of the asset under the following depreciation methods:

1.		straight-line
2.		double diminishing-balance
3.		units-of-production

Answer 1

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