Answer:
The correct answer is A.
Explanation:
Giving the following information:
Equipment was purchased for $152000. Freight charges amounted to $5000 and there was a cost of $14000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $38000 salvage value at the end of its 5-year useful life.
First, we need to calculate the total cost of the equipment.
Total cost= purchasing price + freight + cost required to put the asset to work
Total cost= 152,000 + 5,000 + 14,000= $171,000
Now, we can determine the depreciation cost:
Annual depreciation= (original cost - salvage value)/estimated life (years)
Annual depreciation= (171,000 - 38,000)/5= $26,600
