Shen Athletics Purchased Factory Equipment with an Invoice Price of

question 89

Essay

Shen Athletics purchased factory equipment with an invoice price of $ 92,000. Other costs incurred were freight costs, $ 2,500; installation of wiring and foundation, $ 2,200; material and labour costs in testing equipment, $ 700; oil lubricants and supplies to be used with equipment, $ 500; one-year fire insurance policy covering equipment, $ 1,400. The equipment is estimated to have an $ 8,000 residual value at the end of its 5-year useful service life.
Instructions
a) Calculate the acquisition cost of the equipment. Identify each element of cost clearly.
b) If the double diminishing-balance method of depreciation was used, the constant percentage applied to a diminishing carrying amount would be ______.

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Definitions:

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