Compute the acquisition cost of the equipment

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Reference no: EM132554106

Johnson Company purchased factory equipment with an invoice price of $150,000. Other costs incurred were freight costs, $1,200; installation wiring and foundation, $2,100; material and labor costs in testing equipment, $700; oil lubricants and supplies to be used with equipment, $500; fire insurance policy covering equipment, $1,400. The equipment is estimated to have a $5,000 salvage value at the end of its 10-year useful service life.

Requirements:

Question 1) Compute the acquisition cost of the equipment. Clearly identify each element of cost.

Question 2) Using the double declining balance method: a)calculate and prepare the journal entry for depreciation expense for the second year.

Reference no: EM132554106

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