At the beginning of the year, Young Company bought three used machines from Vinc

Question

At the beginning of the year, Young Company bought three used machines from Vince, Inc. The machines immediately were overhauled, were installed, and started operating. Because the machines were different, each was recorded separately in the accounts Machine A $7,650 250 1,600 Machine C $9,400 550 1,150 350 Machine B Amount paid for asset Installation costs Renovation costs prior to use Repairs after production begarn $25,700 650 1,250 360 By the end of the first year, each machine had been operating 2,000 hours Required 1. Compute the cost of each machine Cost of Machine Machine A s Machine BS Machine CS 9,300 27,400 10,800 2. Prepare the journal entry to record depreciation expense at the end of year 1, assuming the following (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) Estimates Depreciation Method Straight-ine Units-of-production Double-declining-balance Machine Life Residual Value $ 200 5 years 10,000 hours 6 years 600 900 TIP: Remember that the formula for double-declining-balance uses cost minus accumulated depreciation (not residual value)

Explanation / Answer

Answer = 1) CALCULATION OF THE COST OF MACHINE Machiene A   Machiene B Machiene C Amount paid for Assets=                      7,650.00 25700 9400 Add: Installation Cost                          250.00 650 550 Cost of the machine                      7,900.00         26,350.00              9,950.00 Note: Renovation cost and repair cost after installation is not taken in total cost CALCULATION OF THE DEPRECIATION AS PER STRAIGHT LINE METHOD FOR MACHINE A Purchase Cost of Machine $                  7,900.00 Less: Salvage Value $                      200.00 Net Value for Depreciation $                  7,700.00 Usefule life of the Assets 5 years Depreciation per year = Value for Depreciation / 5 years =                      1,540.00 Total Depreciation for the year end =                      1,540.00 CALCULATION OF THE DEPRECIATION AS PER UNITS OF PRODUCTION FOR MACHINE B Purchase Cost of Machine $                26,350.00 Less: Salvage Value $                      600.00 Net Value for Depreciation $                25,750.00 Expected to production in hours =                    10,000.00 Hours Depreciation per Hours =                            2.575 Per Hours ($ 25,750 / 10,000 Units) Depreciation for Year 1 = (2000 units * $ 2.575) $                  5,150.00 CALCULATION OF THE DEPRECIATION AS PER DOUBLE DECLINE METHOD FOR MACHINE C Purchase Cost of Machine $                  9,950.00 Useful Life = 6 years Depreciation per year = $                  1,658.33 (Purchase price / Useful life) Rate of Depreciation = Rate of Depreciation = (1 / 6 Years ) 0.166667 or 16.67% 0.166666667 (Depreication / Purchase price ) Double decline deprection rate = 16.6667% * 2 = 33.33% Depreciation for the year 1 = Purchase Value =                      9,950.00 Rate of Depreciation = 33.33% =                            3,317 1) JOURNAL ENTRY General Journal Debit   Credit Depreciation Expenses                          10,007         To Accumulated Depreciation - Machine A           1,540.00         To Accumulated Depreciation - Machine B           5,150.00         To Accumulated Depreciation - Machine C                 3,317

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.