23) Assume the same information as in problem 22. How much depreciation expense

Question

23) Assume the same information as in problem 22. How much depreciation expense will be recorded will be recorded in 20177 a. 15,000 b. 17,000 c. 18,000 d. 20,000 24) Which of the following costs are not included in calculating the acquisition cost of a fixed asset? a. Purchase Price b. Trial Runs c. Closing Costs to Real Estate Agent d. Regular Maintenance 25) Company X purchased a machine for $40,000 with a residual value of $3,000. The useful life of the machine was 4 years. What is Company X's depreciable cost? a. $37,000 b. $3,000 c. $43,000 d. $40,000

Explanation / Answer

Answer:-24)- The following cost are not included in calculating the acquisition cost of a fixed asset:-Regular maintenance (Option d).

Explanation:- In general, the costs to assign to a fixed asset are its purchase cost and any costs incurred to bring the asset to the location and condition needed for it to operate in the manner intended by management. More specifically, assign the following costs to a fixed asset:

1.Purchase price of the item and related taxes

2.Construction cost of the item, which can include labor and employee benefits

3.Import duties

4.Inbound freight and handling

5.Interest costs incurred during the period required to bring an asset to the condition and location necessary for its intended use

6.Site preparation

7.Installation and assembly

8.Asset startup testing

9.Professional fees

25)-The company X’s depreciable cost is $37000 (Option a).

Explanation:- Depreciable cost means the amount of an asset's cost that will be depreciated. It is the cost minus the expected salvage value (ie $40000-$3000 =$37000).

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