Question

what types of costs are included in an asset's depreciable basis? select all that apply.multiple select question.an adjustment downward to record the selling price of the asset replacedpurchase price of the assetsales tax and freight chargesinstallation and testing costs

Answer 1

The depreciable basis of an asset includes its purchase price, sales tax and freight charges, and installation and testing costs, but not the adjustment to the selling price of a replaced asset.

Step-by-step explanation:

The types of costs included in an asset's depreciable basis are the purchase price of the asset, sales tax and freight charges, and installation and testing costs. These elements all contribute to the initial value of the asset, which will then be depreciated over its useful life.

The costs that are included in an asset's depreciable basis are:

• Purchase price of the asset: This is the original cost of acquiring the asset.
• Sales tax and freight charges: These are additional costs incurred when purchasing the asset, such as taxes and shipping fees.
• Installation and testing costs: These costs include the expenses associated with setting up the asset and ensuring it is functioning properly.

In contrast, an adjustment downward to record the selling price of the asset replaced is not included in the depreciable basis; it pertains to the valuation of the old asset rather than the new one's basis for depreciation.