Sunday, December 28, 2008

What Costs for Depreciation?

A manufacturing company incurred the following costs related to the purchase of an equipment on January 1, 2009:

Invoice cost, terms 1/10 n 30, fob shipping point $55,000

(Payment is made within discount period)

Shipping costs 1,000
Installation costs 1,500
First year utility costs 2,000

What cost should Bears use as a basis for depreciation?

Answer $57,000

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