At the beginning of the year, Grillo Industries bought three used machines from Freeman Incorporated. The machines immediately were overhauled, were installed, and started operating. Because the machines were different, each was recorded separately in the accounts. Machine A Machine B Machine C Cost of the asset $ 10,800 $ 40,000 $ 23,800 Installation costs 950 3,900 3,000 Renovation costs prior to use 750 3,500 4,000 Repairs after production began 700 900 2,500 By the end of the first year, each machine had been operating 8,000 hours. Required: Compute the cost of each machine. Prepare the journal entry to record depreciation expense at the end of year 1, assuming the following: Estimates Machine Life Residual Value Depreciation Method A 5 years $ 2,800 Straight-line B 20,000 hours 2,400 Units-of-production C 10 years 1,600 Double-declining-balance
At the beginning of the year, Grillo Industries bought three used machines from Freeman Incorporated. The machines immediately were overhauled, were installed, and started operating. Because the machines were different, each was recorded separately in the accounts. Machine A Machine B Machine C Cost of the asset $ 10,800 $ 40,000 $ 23,800 Installation costs 950 3,900 3,000 Renovation costs prior to use 750 3,500 4,000 Repairs after production began 700 900 2,500 By the end of the first year, each machine had been operating 8,000 hours. Required: Compute the cost of each machine. Prepare the journal entry to record depreciation expense at the end of year 1, assuming the following: Estimates Machine Life Residual Value Depreciation Method A 5 years $ 2,800 Straight-line B 20,000 hours 2,400 Units-of-production C 10 years 1,600 Double-declining-balance
Chapter11: Long-term Assets
Section: Chapter Questions
Problem 4PB: During the current year, Arkells Inc. made the following expenditures relating to plant machinery. ...
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At the beginning of the year, Grillo Industries bought three used machines from Freeman Incorporated. The machines immediately were overhauled, were installed, and started operating. Because the machines were different, each was recorded separately in the accounts.
| Machine A | Machine B | Machine C | |||||||
| Cost of the asset | $ | 10,800 | $ | 40,000 | $ | 23,800 | |||
| Installation costs | 950 | 3,900 | 3,000 | ||||||
| Renovation costs prior to use | 750 | 3,500 | 4,000 | ||||||
| Repairs after production began | 700 | 900 | 2,500 | ||||||
By the end of the first year, each machine had been operating 8,000 hours.
Required:
- Compute the cost of each machine.
- Prepare the
journal entry to recorddepreciation expense at the end of year 1, assuming the following:
| Estimates | |||||||
| Machine | Life | Residual Value | Depreciation Method | ||||
| A | 5 | years | $ | 2,800 | Straight-line | ||
| B | 20,000 | hours | 2,400 | Units-of-production | |||
| C | 10 | years | 1,600 | Double-declining-balance | |||
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