Blue Company purchased a machine on July 1, 2018, for $30,800. Blue paid $220 in

Question

Blue Company purchased a machine on July 1, 2018, for $30,800. Blue paid $220 in title fees and county property tax of $138 on the machine. In addition, Blue paid $550 shipping charges for delivery, and $523 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 $3,300.

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

Depreciation base $

Explanation / Answer

Calculate depreciation base :

Purchase cost of machine 30800 Title fees 220 Property tax 138 Shipping charges 550 Paid to local contractor to build and wire a platform for the machine on plant floor 523 Total cost of machine 32231 Less:Salvage value (3300) Depreciation Base 28931

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