At the beginning of the year, Young Company bought three used machines from Vince, Inc. 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 Amount paid for asset $ 7,700 $ 25,800 $ 9,500 Installation costs 300 700 600 Renovation costs prior to use 1,700 1,300 1,300 Repairs after production began 420 370 375 By the end of the first year, each machine had been operating 5,000 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: TIP: Remember that the formula for double-declining-balance uses cost minus accumulated depreciation (not residual value). Estimates Machine Life Residual Value Depreciation Method A 5 years $ 300 Straight-line B 20,000 hours 800 Units-of-production C 6 years 1,200 Double-declining-balance
At the beginning of the year, Young Company bought three used machines from Vince, Inc. 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 Amount paid for asset $ 7,700 $ 25,800 $ 9,500 Installation costs 300 700 600 Renovation costs prior to use 1,700 1,300 1,300 Repairs after production began 420 370 375 By the end of the first year, each machine had been operating 5,000 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: TIP: Remember that the formula for double-declining-balance uses cost minus accumulated depreciation (not residual value). Estimates Machine Life Residual Value Depreciation Method A 5 years $ 300 Straight-line B 20,000 hours 800 Units-of-production C 6 years 1,200 Double-declining-balance
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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At the beginning of the year, Young Company bought three used machines from Vince, Inc. 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 | |||||||
| Amount paid for asset | $ | 7,700 | $ | 25,800 | $ | 9,500 | |||
| Installation costs | 300 | 700 | 600 | ||||||
| Renovation costs prior to use | 1,700 | 1,300 | 1,300 | ||||||
| Repairs after production began | 420 | 370 | 375 | ||||||
By the end of the first year, each machine had been operating 5,000 hours.
Required:
- Compute the cost of each machine.
- Prepare the
journal entry to recorddepreciation expense at the end of year 1, assuming the following: TIP: Remember that the formula for double-declining-balance uses cost minusaccumulated depreciation (not residual value).
| Estimates | |||||||
| Machine | Life | Residual Value | Depreciation Method | ||||
| A | 5 | years | $ | 300 | Straight-line | ||
| B | 20,000 | hours | 800 | Units-of-production | |||
| C | 6 | years | 1,200 | Double-declining-balance |
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