Kemp Company Purchased Factory Equipment with an Invoice Price of €85,000

Essay

Kemp Company purchased factory equipment with an invoice price of €85,000. Other costs incurred were freight costs, €1,100; installation wiring and foundation, €2,200; material and labor costs in testing equipment, €700; oil lubricants and supplies to be used with equipment, €500; fire insurance policy covering equipment, €1,400. The equipment is estimated to have a €5,000 residual value at the end of its 10-year useful service life.
Instructions
(a) Compute the acquisition cost of the equipment. Clearly identify each element of cost.
(b) If the double-declining-balance method of depreciation was used, the constant percentage applied to a declining book value would be __________.