Acquisition cost and double-declining balance depreciation

Reference no: EM1344257

Howard Company bought factory equipment with invoice price of $90,000. Other costs incurred were freight costs, $2,100; installation wiring and foundation, $2,200; material and labor costs in testing equipment, $700; oil lubricants and supplies to be employed with equipment, $500; fire insurance policy covering equipment, $1,400. The equipment is estimated to have $5,000 salvage value at the end of its 8-year useful service life.

Instructions

a) Evaulate the acquisition cost of equipment. Clearly recognize each element of cost.

b) If the double-declining-balance technique of depreciation was employed, the constant percentage applied to declining book value would be __________.

Reference no: EM1344257

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