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  3. 1. 1. ch. 8: fixed asset cost, depreciation, a

1. 1. Ch. 8: Fixed Asset Cost, Depreciation, and Revision of...

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Accounting

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1. Ch. 8: Fixed Asset Cost, Depreciation, and Revision of Estimate: ABC Company purchased equipment for use in its operations on January 1, Year 1 . The list price of the equipment was $10,000. The company was given a discount in the amount of $500. Additional expenditures incurred related to the purchase of the equipment included sales tax of $800, testing of equipment costing $1,200, and insurance on the equipment for the next year in the amount of $600. a. What is the capitalized cost of the equipment? b. Record the year 1 and year 2 depreciation expense for the-computer, assuming a 10 -year life and a $1,000 salvage value. c. What is the book value of the equipment at the end of year 2 ? d. On January 1, Year 3, it was determined that the equipment's life was expected to be 6 years (no 10 years as previously estimated). In addition, it was determined that there would be no salvage value. Record the depreciation for year 3

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