Kabale Company Purchased Factory Equipment with an Invoice Price of $92,000

Essay

Kabale Company purchased factory equipment with an invoice price of $92,000. Other costs incurred were freight costs, $2,500; installation of wiring and foundation, $2,200; material and labour costs in testing equipment, $700; oil lubricants and supplies to be used with equipment, $500; one-year fire insurance policy covering equipment, $1,400. The equipment is estimated to have an $8,000 residual value at the end of its 5-year useful service life.
Instructions
a. Calculate the acquisition cost of the equipment. Identify each element of cost clearly.
b. If the double diminishing-balance method of depreciation was used, the constant percentage applied to a diminishing carrying amount would be __________.