A new machine with a purchase price of $97,641.00, with transportation costs of $8,751.00, installation costs of $6,548.00, and special acquisition fees of $1,701.00. Calculate a cost basis.
Select the correct answer.
$97,641.00
$104,189.00
$114,641.00
$105,890.00
A machine with a cost of $76,560.00 has an estimated residual value of $5,844.00 and an estimated life of 3 years or 14,382 hours. It is to be depreciated by the units-of-production method. What is the amount of depreciation for the second full year, during which the machine was used 4,662 hours?
Select the correct answer.
$47,144.00
$24,817.32
$23,572.00
$22,922.96
Question – First;
Cost basis of Machine = $114641
Explanation;
Cost basis of machine is consisted of all those costs which are essential to bring a machine into functional conditional. Hence in given case cost basis of machine will be;
(Purchase price $97641 + Transportation costs $8751 + Installation costs $6548 + Special acquisition fees $1701) = $114641
Question – Second;
The amount of depreciation for the second full year = $22922.96
Explanation;
Cost of machine is given = $76560
Residual value is given = $5844
Total estimated hours = 14382
Total hours used in second year = 4662
So depreciation for second year will be ($76560 - $5844) * 4662 / 14382 = $22922.96 (Approx.)
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