Establishing Cost Basis

15. A new machine with a purchase price of $94,000, with transportation costs of $8,000, installation costs of $6,000, and special acquisition fees of $2,000, would have a cost basis of _______.
$ 96,000
$108,000
$102,000
$110,000

16. A machine with a cost of $65,000 has an estimated residual value of $5,000 and an estimated life of 5 years or 15,000 hours. It is to be depreciated by the units-of-production method. What is the amount of depreciation for the second full year, during which the machine was used 5,000 hours?
$8,000
$20,000
$12,000
$21,667

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Solution Summary

A new machine with a purchase price of $94,000, with transportation costs of $8,000, installation costs of $6,000, and special acquisition fees of $2,000, would have a cost basis of