Cominsky Company purchased a machine on July 1, 2018, for $28,000. Cominsky paid $200 in title...

Cominsky Company purchased a machine on July 1, 2018, for $28,000. Cominsky paid $200 in title fees and county property tax of $125 on the machine. In addition, Cominsky paid $500 shipping charges for delivery, and $475 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 $3,000. Determine the depreciation base of Cominsky’s new machine. Cominsky uses straightline depreciation.

Expert Solution

Machine purchase cost	$ 28,000.00
Fees and property tax	$ 125.00
Shipping charges	$ 500.00
Additional cost	$ 475.00
Total cost of machine to be capitalized	$ 29,100.00

Straight line Method
A	Cost	$ 29,100.00
B	Residual Value	$ 3,000.00
C=A - B	Depreciable base	$ 26,100.00
D	Life [in years left ]	6
E=C/D	Annual SLM depreciation	$ 4,350.00

Year	Book Value	Depreciation expense	Ending Book Value	Accumulated Depreciation
2018	$ 29,100.00	$ 2,175.00	$ 26,925.00	$ 2,175.00
2019	$ 26,925.00	$ 4,350.00	$ 22,575.00	$ 6,525.00
2020	$ 22,575.00	$ 4,350.00	$ 18,225.00	$ 10,875.00
2021	$ 18,225.00	$ 4,350.00	$ 13,875.00	$ 15,225.00
2022	$ 13,875.00	$ 4,350.00	$ 9,525.00	$ 19,575.00
2023	$ 9,525.00	$ 4,350.00	$ 5,175.00	$ 23,925.00
2024	$ 5,175.00	$ 2,175.00	$ 3,000.00	$ 26,100.00

Answer--- Depreciation base=$26100

ekkarill92 answered 3 years ago

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