Mason Ltd. purchased, for cash, equipment with an invoice price of $90,000. Other costs incurred were freight costs, $1,400; insurance while the equipment was in transit, $1,200; material and labour costs in testing equipment, $2,000; oil lubricants and supplies to be used while operating the equipment, $850; annual fire insurance policy covering equipment after it was put in use, $900; import duties $400. The equipment is estimated to have an $8,000 residual value at the end of its 10-year useful service life.

REQUIRED:

1. Calculate the cost of the equipment.
2. Record the purchase of the equipment.
3. Prepare the journal entry for the annual depreciation, assuming the straight-line method of depreciation is used.