9. PPE: Easy 3 Company acquired a machine on April 1, 2020 and incurred the following cost: Cash paid for machine Cost of transporting machine Cost of installation Cost of testing machine Cost of safety rails and platform surrounding machine Cost of water device to keep machine cool Cost of adjustment to machine to make it operate more efficiently Cost of repairing damage during installation Cost of spare parts to cover breakdown Estimated dismantling cost to be incurred as required by contract Insurance cost for the current year Cost of training personnel who will use the machine 900,000 30,000 50,000 40,000 60,000 80,000 75,000 45,000 155,000 65,000 15,000 25,000 a. What total amount should be capitalized as cost of machine?F b. If the machine has a useful life of 5 years and has a salvage value of 200,000, compute the gain or loss if the machine was sold on December 31, 2020 for 1,400,000? Indicate if it is a gain or loss. c. If the machine has a useful life of 5 years and has a salvage value of 200,000, compute the gain or loss if the machine was sold on December 31, 2020 for 1,400,000? Indicate if it is a gain or loss.
9. PPE: Easy 3 Company acquired a machine on April 1, 2020 and incurred the following cost: Cash paid for machine Cost of transporting machine Cost of installation Cost of testing machine Cost of safety rails and platform surrounding machine Cost of water device to keep machine cool Cost of adjustment to machine to make it operate more efficiently Cost of repairing damage during installation Cost of spare parts to cover breakdown Estimated dismantling cost to be incurred as required by contract Insurance cost for the current year Cost of training personnel who will use the machine 900,000 30,000 50,000 40,000 60,000 80,000 75,000 45,000 155,000 65,000 15,000 25,000 a. What total amount should be capitalized as cost of machine?F b. If the machine has a useful life of 5 years and has a salvage value of 200,000, compute the gain or loss if the machine was sold on December 31, 2020 for 1,400,000? Indicate if it is a gain or loss. c. If the machine has a useful life of 5 years and has a salvage value of 200,000, compute the gain or loss if the machine was sold on December 31, 2020 for 1,400,000? Indicate if it is a gain or loss.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:9. PPE: Easy 3 Company acquired a machine on April 1, 2020 and incurred the following
cost:
Cash paid for machine
Cost of transporting machine
Cost of installation
Cost of testing machine
Cost of safety rails and platform surrounding machine
Cost of water device to keep machine cool
Cost of adjustment to machine to make it operate more efficiently
Cost of repairing damage during installation
Cost of spare parts to cover breakdown
Estimated dismantling cost to be incurred as required by contract
Insurance cost for the current year
Cost of training personnel who will use the machine
900,000
30,000
50,000
40,000
60,000
80,000
75,000
45,000
155,000
65,000
15,000
25,000
a. What total amount should be capitalized as cost of machine?F
b. If the machine has a useful life of 5 years and has a salvage value of 200,000, compute
the gain or loss if the machine was sold on December 31, 2020 for 1,400,000? Indicate if
it is a gain or loss.
c. If the machine has a useful life of 5 years and has a salvage value of 200,000, compute
the gain or loss if the machine was sold on December 31, 2020 for 1,400,000? Indicate if
it is a gain or loss.
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