ABC already spent $85,000 on a feasibility study for a machin that will prodcue

Question

ABC already spent $85,000 on a feasibility study for a machin that will prodcue a new product. The machine will cost $2,575,000. Required modifications will cost $375,000. ABC will need to invest $75,000 for additional inventory. The machine has an IRS approved useful of 7 years; it is presumed to have no salvage value. It will only be operated for 3 years, after which it will be sold for $600,000. What is the depreciable cost basis of the machine? A. $2,575,000 B. $2,950,000 C. $3,025,000 D. $2,350,000

Explanation / Answer

C. $3,025,000

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