Invaders Ltd recently purchased a cutting machine from one of its suppliers. The machine waspurchased on 01 March 2019 and brought into use on 01 May 2019. The financial year end of thecompany is 28 February.The following costs were incurred relating to the purchase of the machine:Purchase PriceDelivery costsAdministration costsImport duties (non-refundable)Staff party to celebrate the acquisition of the new machineTesting to ensure that machine is fully operationalInstallation costsThe following table indicates the number of units produced over a 3-month period:March-May 2019150 000 unitsJune-August 2019220 000 units180 000 units230 000 units195 000 units232 000 units180 000 units255 000 unitsSeptember-November 2019December-February 2020March-May 2020June-August 2020September-November 2020December-February 2021RandThe machine has a residual value of R80 000 and will be depreciated using the units of productionmethod. The machine is expected to produce a total of 9 000 000 units over its useful life of 10years.You are required to:a) Calculate the cost to be capitalised to the machinery account.b)Provide the journal entries for the depreciation for the years endedFebruary 2020 and 2021.980 00015 50022 00012 00018 8005 50032 000c) Prepare an extract of the Statement of Financial Position to reflect the machinery as atFebruary 2021.Page 6 of 7

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ased a cutting machine from one of its suppliers. The machine was 9 and brought into use on 01 May 2019. The financial year end of the curred relating to the purchase of the machine: lable) acquisition of the new machine hine is fully operational s the number of units produced over a 3-month period: 150 000 units 220 000 units 9 180 000 units 230 000 units 195 000 units 232 000 units O 180 000 units 255 000 units be capitalised to the machinery account. value of R80 000 and will be depreciated using the units of production Dected to produce a total of 9 000 000 units over its useful life of 10 Intrian Rand donaciation for the 980 000 15 500 22 000 12 000 18 800 5 500 32 000

ased a cutting machine from one of its suppliers. The machine was 9 and brought into use on 01 May 2019. The financial year end of the curred relating to the purchase of the machine: lable) acquisition of the new machine hine is fully operational s the number of units produced over a 3-month period: 150 000 units 220 000 units 9 180 000 units 230 000 units 195 000 units 232 000 units O 180 000 units 255 000 units be capitalised to the machinery account. value of R80 000 and will be depreciated using the units of production Dected to produce a total of 9 000 000 units over its useful life of 10 Intrian Rand donaciation for the 980 000 15 500 22 000 12 000 18 800 5 500 32 000

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 9EB: Ronson recently purchased a new boat to help ship product overseas. The following information is...

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