Capitalize And Depreciate Fixed Assets Practice Test

A company purchases equipment for $80,000, pays $3,000 in freight, $5,000 for installation, and $1,500 for a one-year insurance policy on the equipment. What is the capitalized cost of the equipment?

A machine costs $120,000, has a salvage value of $10,000, and a useful life of 5 years. Using the straight-line method, what is annual depreciation expense?