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Hummingbird Ltd. purchased, for cash, factory equipment with an invoice price of $80,000. Other costs...

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Accounting

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Hummingbird Ltd. purchased, for cash, factory equipment with an invoice price of $80,000. Other costs incurred were freight costs, $1,600; installation, wiring and foundation, $13,500; material and labour costs in testing equipment, $500; oil lubricants and supplies to be used while operating the equipment, $750; fire insurance policy covering equipment, $1,400. The equipment is estimated to have a $10,000 residual value at the end of its 8-year useful service life. of Required: (a) Calculate the cost of the equipment (6 marks) (b) Record the purchase of the equipment. (1 mark) (c) Calculate the annual depreciation expense, assuming the straight-line method of depreciation is used. (2 marks)

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