The McCarthy and Mars (IM) Company purchased a new machine on January 1, 2020 for a list price of $500,000. In addition to the list price, MM paid a 6% sales tax on the list price. MM also incurred installation and delivery charges of $24,000 in total. MM also paid $6,000 to have the old machine removed and disposed of. During the installation process Mars tripped over the installer and knocked McCarthy into the machine causing damages to the machine in the amount of $3,000. The machine is expected to have a useful life of 10 years or 250,000 units with an estimated salvage value of $20,000. There were 30,000 units produced in 2020 and 35,000 units produced in 2021. If necessary, round your answers to the nearest dollar. REQUIREMENTS: SHOW ALL COMPUTATIONS CLEARLY!! Compute the initial cost of the machine on 1-1-2020, 500,000 6000 24,000 = 530,000 1. IGNORE YOUR ANSWER TO PART 1 AND ASSUME THE INITIAL COST IS $570.000 FOR THE REMAINING PARTS OF THIS PROBLEM! THE SALVAGE VALUE IS STILL $20,000
The McCarthy and Mars (IM) Company purchased a new machine on January 1, 2020 for a list price of $500,000. In addition to the list price, MM paid a 6% sales tax on the list price. MM also incurred installation and delivery charges of $24,000 in total. MM also paid $6,000 to have the old machine removed and disposed of. During the installation process Mars tripped over the installer and knocked McCarthy into the machine causing damages to the machine in the amount of $3,000. The machine is expected to have a useful life of 10 years or 250,000 units with an estimated salvage value of $20,000. There were 30,000 units produced in 2020 and 35,000 units produced in 2021. If necessary, round your answers to the nearest dollar. REQUIREMENTS: SHOW ALL COMPUTATIONS CLEARLY!! Compute the initial cost of the machine on 1-1-2020, 500,000 6000 24,000 = 530,000 1. IGNORE YOUR ANSWER TO PART 1 AND ASSUME THE INITIAL COST IS $570.000 FOR THE REMAINING PARTS OF THIS PROBLEM! THE SALVAGE VALUE IS STILL $20,000
Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization
Section: Chapter Questions
Problem 55P
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