At the beginning of the year, Plummer’s Sports Center bought three used fitness

Question

At the beginning of the year, Plummer’s Sports Center bought three used fitness machines from Advantage, Inc. The machines immediately were overhauled, installed, and started operating. The machines were different; therefore, each had to be recorded separately in the accounts.

At the beginning of the year, Plummer’s Sports Center bought three used fitness machines from Advantage, Inc. The machines immediately were overhauled, installed, and started operating. The machines were different; therefore, each had to be recorded separately in the accounts.

IThe following information applies to the questions displayed below. At the beginning of the year, Plummer's Sports Center bought three used fitness machines from Advantage, Inc. The machines immediately were overhauled, installed, and started operating. The machines were different, therefore, each had to be recorded separately in the accounts. Machine A Machine B Machine C 1,200 Amount paid for asset Installation costs Renovation costs prior to use $26,800 37,000 $22,500 1800 2.000 3,700 1,200 2,400 By the end of the first year, each machine had been operating 6,300 hours. 5 value: Required information 10.00 points Required 1. Compute the cost of each machine. Total Cost Machine A Machine B Machine

Explanation / Answer

                                                                            Machine A    Machine B     Machine C

      Amount paid for asset                                    $26,800         $37,000         $22,500

      Installation cost                                                  1,800             2,000             1,200

      Renovationo costs prior to use                            3,700    1,200 2,400

                                                                           -----------------------------------------------------------------

TOTAL                                                                 $32,300         $40,200         $26,100

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When you purchase a fixed assest, all cost that is incurred prior to the use of the asset should be capitalised and there-by added to the value of the fixed asset. Therefore the Installation cost and renovation cost prior to the use has been added to the value of the fixed asset.

        

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