Question

Equipment was purchased for $100,000 plus $1,000 in freight charges. Installation costs were $500 and sales tax totaled $7,500. Hiring a special consultant to provide advice during the selection of the equipment cost $1,000. What is this asset's depreciable basis?

Answer 1

Answer: $109,000

Step-by-step explanation:

The depreciation basis of an asset is the amount of the cost of a fixed asset which the business can depreciate over time.

Based on the scenario and information given in the question, the assets depreciable basis will be:

= 100,000 + 500 + 1000 + 7500

= $109,000