Padre, Inc., purchased a used piece of heavy equipment for $25,000. Delivery of

Question

Padre, Inc., purchased a used piece of heavy equipment for $25,000. Delivery of the equipment to Padre's business site cost $750. Expenditures to recondition the equipment and prepare it for use totaled $2,230. The maintenance for the first year Padre owned the equipment was $1,200.

Determine the cost that is the basis for calculating annual depreciation on the equipment.(Omit the "$" sign in your response.)

Padre, Inc., purchased a used piece of heavy equipment for $25,000. Delivery of the equipment to Padre's business site cost $750. Expenditures to recondition the equipment and prepare it for use totaled $2,230. The maintenance for the first year Padre owned the equipment was $1,200.

Explanation / Answer

Everything but the annual maintenance can be capitalized. Depreciation base is ($25,000 + $750 + $2,230) = $27,98

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