Time value of money is an important aspect of money management. Why is it important to know what interest rates, terms of an agr
1 answer:
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Answer:
$11,870
Explanation:
Given:
List price = $168,000
Discount = 10%
Shipping cost = $1,000
Sales tax = $6,500
Salvage value = $40,000
Useful life = 10 years
Now,
Purchasing price = List price - Discount
Purchasing price = $168,000 - [10% × $168,000]
Purchasing price = $168,000 - $16,800
Purchasing price = $151,200
Costs that are directly related to the purchase of asset are capitalized.
Thus,
Cost = Purchasing price + Shipping costs + Sales tax
Cost = $151,200 + $1,000 + $6,500
Cost = $158,700
Now,
Annual straight line depreciation =
Annual straight line depreciation =
Annual straight line depreciation =
Annual straight line depreciation = $11,870