At the beginning of the year, Grillo Industries bought three used machines from Freeman Incorporated. The machines immediately were overhauled, were installed, and started operating. Because the machines were different, each was recorded separately in the accounts. Machine A Machine B Machine C Cost of the asset $10,600 $39,800 $23,600 Installation costs 850 3,700 2,800 Renovation costs prior to use 650 3,300 3,800 Repairs after production began 500 700 2,300 By the end of the first year, each machine had been operating 8,000 hours. Required: Compute the cost of each machine. Prepare the journal entry to record depreciation expense at the end of year 1, assuming the following:
At the beginning of the year, Grillo Industries bought three used machines from Freeman Incorporated. The machines immediately were overhauled, were installed, and started operating. Because the machines were different, each was recorded separately in the accounts.
Machine A Machine B Machine C
Cost of the asset $10,600 $39,800 $23,600
Installation costs 850 3,700 2,800
Renovation costs prior to use 650 3,300 3,800
Repairs after production began 500 700 2,300
By the end of the first year, each machine had been operating 8,000 hours.
Required:
- Compute the cost of each machine.
- Prepare the
journal entry to recorddepreciation expense at the end of year 1, assuming the following:
Estimates
__________________________________________
Machine Life Residual Value Depreciation Method
A 5 years $2,600 Straight-line
B 20,000 hours 2,200 Units-of-production
C 10 years 1,400 Double-declining-balance
Required 1
Compute the cost of each machine.
Cost of Machine
Machine A [ ]
Machine B [ ]
Machine C [ ]
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