At the beginning of the year, The following mformation applies to the questions

Question

At the beginning of the year,

The following mformation 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 imimediately were overhouled, installed, and started operating The machines were different therefor each had to be recorded separately in the accounts Machine Ai Machine B Amount paid for asset Installation costs Renovation costs príor to use S 2310033700 S 11,100 1,300 3,100 500 2,700 1100 2.900 By the end of the first year, each machine had been operating 4,900 hours Required information 1000 points Required: 1. Compute the cost of each machine Machine A Machine B achine C

Explanation / Answer

Machine

A

B

C

amount paid

23100

33700

11100

installation cost

500

1100

1300

renovation cost prior to use

2700

2900

3100

cost of machine

26300

37700

15500

Depreciation on machine A

cost of machine

26300

less scrap value

2300

life of machine

6 Years

Depreciation Method

straight line method =(cost of machine-scrap value)/life of machine

(26300-2300)/5

4800

Depreciation on machine B

cost of machine

37700

less scrap value

2200

total hours of machine

71000

Depreciation Method

units of production = (hours used/total hours)*(cost of machine-scrap value)

(4900/71000)*(37700-2200)

2450

Depreciation on machine C

cost of machine

15500

less scrap value

2300

life of machine

5 years

Depreciation Method

double declining method

straight line depreciation rate

1/5

20%

double declining rate

20*2

40%

double declining depreciation

(15500-2300)*40%

5280

Date

explanation

debit

credit

31-Dec

depreciation expense

12530

accumulated depreciation-A

4800

accumulated depreciation-B

2450

accumulated depreciation-c

5280

Machine

A

B

C

amount paid

23100

33700

11100

installation cost

500

1100

1300

renovation cost prior to use

2700

2900

3100

cost of machine

26300

37700

15500

Depreciation on machine A

cost of machine

26300

less scrap value

2300

life of machine

6 Years

Depreciation Method

straight line method =(cost of machine-scrap value)/life of machine

(26300-2300)/5

4800

Depreciation on machine B

cost of machine

37700

less scrap value

2200

total hours of machine

71000

Depreciation Method

units of production = (hours used/total hours)*(cost of machine-scrap value)

(4900/71000)*(37700-2200)

2450

Depreciation on machine C

cost of machine

15500

less scrap value

2300

life of machine

5 years

Depreciation Method

double declining method

straight line depreciation rate

1/5

20%

double declining rate

20*2

40%

double declining depreciation

(15500-2300)*40%

5280

Date

explanation

debit

credit

31-Dec

depreciation expense

12530

accumulated depreciation-A

4800

accumulated depreciation-B

2450

accumulated depreciation-c

5280

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