Question

Equipment was purchased for $298000. Freight charges amounted to $14000 and there was a cost of $40200 for building a foundation and installing the equipment. It is estimated that the equipment will have a $59200 salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be

Answer 1

Ans.	Step 1 : Calculations of total cost of building:
	Purchase price of building	$298,000
	Add: Freight charges	$14,000
	Add: Foundation and installation cost	$40,200
	Total cost of building	$352,200
	*Step - 2 : Calculations for Accumulated depreciation :
	*Straight line depreciation = (Cost of building - Salvage value) / Useful life
	($352,200 - $59,200) / 5
	$293,000 / 5
	$58,600
	*In straight line method of depreciation, the annual depreciation expenses will
	be same in every year.