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Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

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BuyFindarrow_forward

Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

Note: Round answers to the nearest cent when necessary.

Calculate the total cost, total depreciation, and annual depreciation for the following assets by using the straight-line method.

Cost Shipping Charges Setup Charges Total Cost Salvage Value Estimated Useful Life (years) Total Depreciation Annual Depreciation
$88,600 $625 $2,500 $9,000 7

To determine

To calculate: The total cost, total depreciation and annual depreciation of the asset when the asset purchased cost is $88,600.

Explanation

Given Information:

The cost of the asset is $88,600 and the shipping and the setup charges were $625 and $2,500, respectively. The salvage value of asset is $9,000 and expected to last 7 years.

Formula used:

The steps to calculate annual depreciation by straight line method are as follows:

Step 1: Calculate the total cost.

Step 2: Calculate the total amount of depreciation by subtracting salvage value from the total cost.

Step 3: Calculate the annual depreciation by dividing estimated useful life from the total amount of depreciation

Calculation:

Consider the provided cost of asset is $88,600 and the shipping and the setup charges were $625 and $2,500, respectively.

The total cost of the asset is:

Total cost=Cost of asset+Shipping cost+Setup cost

Now, using the above formula, the total cost of the asset is:

Total cost=88,600+625+2,500=$9

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