anson company had the folowing machinery aquisitions during the year 1. acquired the machine with an invoice price of 3,000,000 subjectnto a cash discount of 10% which was taken . the entity incured cost of 50,000 in removing the old machine prior to the installation of the new one .Machine supplies were acquired at a cost of the 150,000 . 2. During the early part of current year the entity purchase the machine for 500,000 down on four monthly installment 1,250,000 .the cash price of the machine was 4700,000 . 3. at the beginning of the current year, the entity purchased a machine for 2,000,000 in exchange for a noninterest bearing ntes requiring four payments of 500,000 . the first payment was made at the end of current year . the implicit rate of interest for this note at date of issuance was 10% . The present value of an ordinary annuity of 1 at 10% is 3.17 for four periods. the present value of annuity of 1 in advance at 10% is 3.49 for four periods. 4. at the beginning of current year , the entity acquired a machine by issuing a four-year ,noninterest-bearing note for 2,000,000. the has an implicit 10% interest for the type of note .The present value of 1 at 10% for 4 years is 0.68 required: prepare journal entries to record the machinery acquisitions and related interest
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
anson company had the folowing machinery aquisitions during the year
1. acquired the machine with an invoice price of 3,000,000 subjectnto a cash discount of 10% which was taken .
the entity incured cost of 50,000 in removing the old machine prior to the installation of the new one .Machine supplies were acquired at a cost of the 150,000 .
2. During the early part of current year the entity purchase the machine for 500,000 down on four monthly installment 1,250,000 .the cash price of the machine was 4700,000 .
3. at the beginning of the current year, the entity purchased a machine for 2,000,000 in exchange for a noninterest bearing ntes requiring four payments of 500,000 . the first payment was made at the end of current year .
the implicit rate of interest for this note at date of issuance was 10% . The present value of an ordinary annuity of 1 at 10% is 3.17 for four periods.
the present value of annuity of 1 in advance at 10% is 3.49 for four periods.
4. at the beginning of current year , the entity acquired a machine by issuing a four-year ,noninterest-bearing note for 2,000,000.
the has an implicit 10% interest for the type of note .The present value of 1 at 10% for 4 years is 0.68
required:
prepare
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