On 1 Juanuary 2022, XYZ Company acquired and started to use a machine for the production of goods. On the same date, the following expenditures were incurred relating to the machine. Purchase price € 40,000 Freight and insurance costs €2,000 Installation and assembly costs €1, 600 Costs of testing prior to use €1,200 Additional information is as follows: XYZ Company used the cost model for the machine which had an eight- year useful life and no residual value and was depreciated using the sttraight - lien method. XYZ Company did not change the useful life, the residual value and the depreciation method of the machine for 2022 through 2024 The machine was not expected to be sold before 31 December 2024. Question: Assume that XYZ Company sold the machine for €26,000 cash on 31 December 2022. What amount of gain or loss should XYZ Company recognise in its 2024 financial statements as a result of the sale of the machine?

On 1 Juanuary 2022, XYZ Company acquired and started to use a machine for the production of goods. On the same date, the following expenditures were incurred relating to the machine. Purchase price € 40,000 Freight and insurance costs €2,000 Installation and assembly costs €1, 600 Costs of testing prior to use €1,200 Additional information is as follows: XYZ Company used the cost model for the machine which had an eight- year useful life and no residual value and was depreciated using the sttraight - lien method. XYZ Company did not change the useful life, the residual value and the depreciation method of the machine for 2022 through 2024 The machine was not expected to be sold before 31 December 2024. Question: Assume that XYZ Company sold the machine for €26,000 cash on 31 December 2022. What amount of gain or loss should XYZ Company recognise in its 2024 financial statements as a result of the sale of the machine?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 4PB: During the current year, Arkells Inc. made the following expenditures relating to plant machinery. ...

See similar textbooks

Similar questions

On January 1, 2022, Windsor Company purchased the following two machines for use in its production process. Machine A: The cash price of this machine was $43,500. Related expenditures also paid in cash included: sales tax $3,550, shipping costs $150, insurance during shipping $50, installation and testing costs $100, and $200 of oil and lubricants to be used with the machinery during its first year of operations. Windsor estimates that the useful life of the machine is 5 years with a $5,250 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used. Machine B: The recorded cost of this machine was $180,000. Windsor estimates that the useful life of the machine is 4 years with a $16,800 salvage value remaining at the end of that time period. Calculate the amount of depreciation expense that Windsor should record for Machine B each year of its useful life under the following assumptions. (Round depreciation cost per…
On January 1, 2022, Windsor Company purchased the following two machines for use in its production process. Machine A: The cash price of this machine was $43,500. Related expenditures also paid in cash included: sales tax $3,550, shipping costs $150, insurance during shipping $50, installation and testing costs $100, and $200 of oil and lubricants to be used with the machinery during its first year of operations. Windsor estimates that the useful life of the machine is 5 years with a $5,250 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used. Machine B: The recorded cost of this machine was $180,000. Windsor estimates that the useful life of the machine is 4 years with a $16,800 salvage value remaining at the end of that time period. (a) Prepare the following for Machine A. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is…
Invaders Ltd recently purchased a cutting machine from one of its suppliers. The machine was purchased on 01 March 2019 and brought into use on 01 May 2019. The financial year end of the company is 28 February. The following costs were incurred relating to the purchase of the machine: Purchase Price Delivery costs Administration costs Import duties (non-refundable) Staff party to celebrate the acquisition of the new machine Testing to ensure that machine is fully operational Installation costs The following table indicates the number of units produced over a 3-month period: March-May 2019 150 000 units June-August 2019 220 000 units 180 000 units 230 000 units 195 000 units 232 000 units 180 000 units 255 000 units September-November 2019 December-February 2020 March-May 2020 June-August 2020 September-November 2020 December-February 2021 Rand The machine has a residual value of R80 000 and will be depreciated using the units of production method. The machine is expected to produce a…
Manny Company uses many kinds of machines in its operations. The following information relates to a machine that was acquired at the beginning of the current year: Cash paid for machine, including VAT of P96,000 Cost of transporting machine Labor cost of installation by expert fitter Labor cost of testing machine Insurance cost for the current year Cost of training for personnel who will use the machine Cost of safety rails and platform surrounding machine Cost of water device to keep machine cool Cost of adjustment to machine to make it operate more efficiently Estimated dismantling cost to be incurred as required by contract 896,000 30,000 50,000 40,000 15,000 25,000 60,000 80,000 75,000 65,000 What total amount should be capitalized as cost of the machine?
Banko Incorporated manufactures sporting goods. The following information applies to a machine purchased on January 1, Year 1: Purchase price $ 70,500 Delivery cost $ 6,000 Installation charge $ 1,000 Estimated life 5 years Estimated units 149,000 Salvage estimate $ 3,000 During Year 1, the machine produced 45,000 units, and during Year 2 it produced 47,000 units. Required: Determine the amount of depreciation expense for Year 1 and Year 2 using straight-line method. Determine the amount of depreciation expense for Year 1 and Year 2 using double-declining-balance method. Determine the amount of depreciation expense for Year 1 and Year 2 using units of production method. Determine the amount of depreciation expense for Year 1 and Year 2 using MACR
bhavesh
Property, Plant and Equipment (Part 2) Answer and Solution
A company purchased a special purpose machine on August 1st of the previous year. It was installed and ready to run on January 1st of the current year. The following costs were incurred in the purchase and installation of the machine: Invoice price $1,200,000 Freight costs 6,000 Installation costs 64,000 Electrical and power connections 32,000 Repairs to correct damage during uncrating 12,000 Costs to adjust machine to appropriate specifications 56,000 Costs of spare parts for future use 108,000 Sales tax 70,500 Cost of…
On January 1, 2022, Sheffield Company purchased the following two machines for use in its production process. Machine A: Machine B: (a) The cash price of this machine was $41,000. Related expenditures also paid in cash included: sales tax $1,650, shipping costs $200, insurance during shipping $50, installation and testing costs $90, and $200 of oil and lubricants to be used with the machinery during its first year of operations. Sheffield estimates that the useful life of the machine is 5 years with a $4,400 salvage value remaining at the end of that time period. Assume that the straight- line method of depreciation is used. The recorded cost of this machine was $180,000. Sheffield estimates that the useful life of the machine is 4 years with a $10,000 salvage value remaining at the end of that time period. Prepare the following for Machine A. (Round answers to O decimal places, eg. 5,125. List all debit entries before credit entries. Credit
Banko Inc. manufactures sporting goods. The following information applies to a machine purchased on January 1, Year 1: Purchase price Delivery cost Installation charge Estimated life $ 70,500 $ 6,000 $ 1,000 5 years Estimated units Salvage estimate 149, 000 $ 3,000 During Year 1, the machine produced 45,000 units and during Year 2, it produced 47,000 units. Required Determine the amount of depreciation expense for Year 1 and Year 2 using each of the following methods: Year 1 Year 2 a. Straight-line b. Double-declining-balance c. Units of production
The corporation purchased a machinery for P100,000.00 with an estimated useful life of 10 years. See table below for the following data. SCRAP VALUE PRODUCTION WORKING HOURS P4,000.00 400,000 units 120000 working-hours Year Production No. of Working-hours2002 36,000 units 14,0002003 44,000 units 18,000 What is the total depreciation for 2003 using Working Hours and Service Output Method?
1. Shaw Company purchased a machine for P1 260 000 that was placed in service at year - end. The entity incurred additional costs for this machine. Shipping 30 000 Installation 40 000 50 000 Testing At year end, what amount should be reported as machinery?