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5 cards from this section. Quick, good the night before a test.
What are ownership and operating costs?
Think about costs that are constant versus those that depend on equipment usage.
Define salvage value.
What do you think you can sell the equipment for after using it?
What is a key component of ownership costs?
Consider what cost continues even when the equipment is not used.
True or False: Operating costs are fixed and do not change over time.
Think about what happens when you actually use a piece of equipment.
A piece of equipment has an initial cost of $120,000, a salvage value of $15,000, and a useful life of 8 years. Calculate the depreciation using the sum of the years' digits method.
Remember to calculate the sum of the years first and apply it appropriately.
Using the double declining balance method, calculate the depreciation for the first year for equipment with an initial cost of $150,000 and a useful life of 5 years.
Focus on double the straight-line rate and the initial cost.
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