Question
1.Blue, Inc. incurred the following costs related to equipment purchased on January 1, 2015: Purchased equipment for $50,000, terms 2/10, net 30.Paid for the equipment
1.Blue, Inc. incurred the following costs related to equipment purchased on January 1, 2015:
Purchased equipment for $50,000, terms 2/10, net 30.Paid for the equipment on January 5, 2015.
Had the equipment installed and paid the installer $3,000.
Paid the freight bill for the truck that delivered the equipment for $500.
Advertised a new product that will be produced by the new equipment, $1,200.
Sales taxes paid on the equipment amounted to $4,000.
Blue believes the machine will be useful for 5 years, at which time it will be sold for $3,000.
Assuming Blue, Inc. uses the straight-line method of depreciation, what will depreciation expense on its 2016 income statement be?
a.$10,700
b.$11,040
c.$11,980
d.$21,700
e.$22,080
PLEASE PROVIDE EXPLANATION THANK YOU
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