Concord Company purchased a machine on July 1, 2018, for $31,080. Concord paid $

Question

Concord Company purchased a machine on July 1, 2018, for $31,080. Concord paid $222 in title fees and county property tax of $139 on the machine. In addition, Concord paid $555 shipping charges for delivery, and $527 was paid to a local contractor to build and wire a platform for the machine on the plant floor. The machine has an estimated useful life of 6 years with a salvage value of $3,330.

Determine the depreciation base of Concord’s new machine. Concord uses straight-line depreciation.

Explanation / Answer

First of all , let us find out the Asset cost :-

Purchase cost $ 31080 + Title fees 222 + county property tax $139 + shipping charges for delivery $ 555 + local contractor $ 527 = $ 32523

Asset cost includes all those cost which are incurred to acquire the asset and put it into an usuable condition.

Depreciation base = Asset cost $ 32523 - salvage value $3,330 =

$ 29193

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