Which of the following should be included in the acquisition cost of a piece of equipment?

1.Which of the following should be included in the acquisition cost of a piece of equipment?                                                                                            A.    transportation costs                                                            B.    testing costs prior to placing the equipment into production                                          C.    installation costs                                                           D.    All of these choices are correct.                                    2.All of the following are needed for the calculation of straight-line depreciation except               A.    residual value                                                               B.    units produced                                                             C.    estimated life                                                               D.    cost                                                        3.Equipment with a cost of $220,000 has an estimated residual value of $30,000 and an estimated life of 10 years or 19,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 2,100 hours?               A.    $21,000                                                                B.    $30,000                                                                C.    $22,000                                                                D.    $19,000                                                  4.The Weber Company purchased a mining site for $1,750,000 on July 1. The company expects to mine ore for the next 10 years and anticipates that a total of 400,000 tons will be recovered. The estimated residual value of the property is $150,000. During the first year, the company extracted 6,500 tons of ore. The depletion expense is                                                                                            A.    $16,000                                                                B.    $15,000                                                                C.    $26,000                                                                D.    $17,500                                                  5.If a fixed asset, such as a computer, were purchased on January 1 for $3,750 with an estimated life of 3 years and a salvage or residual value of $150, the Year 1 journal entry for annual depreciation expense under the straight-line depreciation method is                                                                                            A.    Depreciation Expense                             1,200                                                                    Accumulated Depreciation                            1,200                                        B.    Accumulated Depreciation                        100                                                                 Depreciation Expense                                     100                                           C.    Accumulated Depreciation  

Answer

All the expenses which are incurred to make the asset ready for use should be included in the cost of equipment. Expenses lik Depletion expense per ton = ($1,750,000-$150,000/400,000 Depletion expense per ton = $1,600,000/400,000 Depletion expense per

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