Hunt Company purchased factory equipment with an invoice price of $90,000 on Jan 1. Other costs incurred

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Question:

Hunt Company purchased factory equipment with an invoice price of $90,000 on Jan 1. Other costs incurred were freight costs, $1,100; installation wiring and foundation, $2,200; material and labor costs in testing equipment, $700; oil lubricants and supplies to be used with equipment, $500; fire insurance policy covering equipment, $1,400. The equipment is estimated to have a $5,000 salvage value at the end of its 8-year useful service life. Instructions

(a) Compute the acquisition cost of the equipment. Clearly identify each element of cost.

(b) If the double-declining-balance method of depreciation was used, show the journal entry to record depreciation expense for the first fiscal year on Dec.31.