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Calculate capitalized cost for basis of depreciation for items below: Truck purchased, upgraded and placed in service Sep 10: Date include Sep 1 Sep 1 Sep 1 Sep 1 Sep 1 Sep 1 Sep 5 Dec 1 Description Amount Purchase of Truck 20,000 Freight 500 Sales Tax 1500 License Plates 360 Liability Insurance 900 Collision Insurance 300 Hydraulic Lift 5000 Special Paint 1000 Total Capitalized Cost: Building purchased June 1, upgraded and placed in service August 1: Include Date June 1 June 1 June 1 June 1 June 1 June 15 July 1 Nov 10 Description Purchase of Building Land Vandalism Title fees Real Property Taxes (County) Pave parking lot Outdoor lighting Fences Total Capitalized Cost: Amount 600,000 200,000 12,000 1,500 6.000 40,000 30.000 20,000 Main Frame computer purchased Jan 1, placed in service Feb 1: include Date Jan 2 Jan 2 Jan 6 Jan 6 Jan 7 Jan 7 Jan 15 Aug 1 Description Raised flooring Air Conditioning Purchase of computer Freight Installation (1 week) Mistakes during installation Testing (2 weeks) Memory upgrade Total Capitalized Cost: Amount 40,000 25,000 700.000 7.000 30,000 10,000 35.000 40,000 Some Rules: Do not capitalize recurrent items, items adding value that occur after 90 days from the placed-in service date, land, vandalism, mistakes in installation, uninsured theft, damage during unpacking and installing, fines for not obtaining proper permits from governmental agencies. Depreciate from the "placed-in-service" date (not from the purchase date); also do not depreciate below salvage value or beyond the useful life of the asset. To get annual depreciation rate: (100% divided by # years of useful life)-First year may need adjusting further in accordance with # of months in-service in the first year /12 months. Same for last year of service: 8 months in-service / 12 months

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