CP9-1 Computing Acquisition Cost and Recording Depreciation under Three Alternative Methods [LO 9- 2, LO 9-3) At the beginning of the year, Young Company bought two 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 $7,600 200 1,500 400 Machine B $25,608 600 1,200 350 Amount paid for asset Installation costs Renovation costs prior to use Repairs after production began By the end of the first year, each machine had been operating 7,000 hours. Required: 1. Compute the cost of each machine. 2. Prepare the journal entry to record depreciation expense at the end of year 1, assuming the following: Estimates Machine Life Residual Value Depreciation Method 48,800 hours 5 years $ 600 1,080 Straight-line Units-of-production Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the cost of each machine. Cost of Machine Machine A Machine B
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.
![CP9-1 Computing Acquisition Cost and Recording Depreciation under Three Alternative Methods (LO 9-
2, LO 9-3]
At the beginning of the year, Young Company bought two 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.
Amount paid for asset
Installation costs
Renovation costs prior to use
Repairs after production began
Machine A
$7,600
200
1,500
400
Machine B
$25,600
600
1,200
350
By the end of the first year, each machine had been operating 7,000 hours.
Required:
1. Compute the cost of each machine.
2. Prepare the journal entry to record depreciation expense at the end of year 1, assuming the following:
Estimates
Life
5 years
48,000 hours
Residual Value Depreciation Method
Straight-line
Units-of-production
Machine
$ 600
1,000
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Compute the cost of each machine.
Cost of
Machine
Machine A
Machine B](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9e32f66d-09c4-42e8-ae49-7bf524a7c65f%2F13266f38-2d0a-4f1b-b411-fdf76dbc5ace%2Fj4840r_processed.jpeg&w=3840&q=75)
![Journal entry
worksheet
1
Record the depreciation expense for the three used machines at the end of
year 1.
Note: Enter debits before credits.
Transaction
General Journal
Debit
Credit
1
Record entry
Clear entry
View general journal](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9e32f66d-09c4-42e8-ae49-7bf524a7c65f%2F13266f38-2d0a-4f1b-b411-fdf76dbc5ace%2Fsobrph_processed.jpeg&w=3840&q=75)
![](/static/compass_v2/shared-icons/check-mark.png)
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)