Financial Accounting, 8th Edition
8th Edition
ISBN: 9780078025556
Author: Robert Libby, Patricia Libby, Daniel Short
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 8, Problem 3AP
Computing the Acquisition Cost and Recording
At the beginning of the year, Ramos Inc. bought three used machines from Santaro Corporation. The machines immediately were overhauled, installed, and started operating. The machines were different: therefore, each had to be recorded separately in the accounts.
| Machine A | Machine B | Machine C | |
| Cost of the asset | $12,200 | $32,500 | $21,700 |
| Installation costs | 1,600 | 1,100 | 1,100 |
| Renovation costs prior to use | 600 | 1,400 | 1,600 |
By the end of the first year, each machine had been operating 7,000 hours.
Required:
- 1. Compute the cost of each machine.
- 2. Give the entry to record depreciation expense at the end of Year 1 (with separate
accumulated depreciation accounts for each machine), assuming the following:
| ESTIMATES | |||
| Machine | Life | Residual Value | Depreciation Method |
| A | 8 years | $1,000 | Straight-line |
| B | 33,000 hours | 2,000 | Units-of-production |
| C | 5 years | 1,400 | Double-declining-balance |
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Required information
P8-3 Computing the Acquisition Cost and Recording Depreciation under Three Alternative Methods LO8-
2, 8-3
[The following information applies to the questions displayed below.)
At the beginning of the year, Plummer's Sports Center bought three used fitness machines from Advantage, Inc. The
machines immediately were overhauled, installed, and started operating. The machines were different; therefore, each
had to be recorded separately in the accounts.
Machine A Machine D
Machine C
Amount paid tor asset
Installation costa
Renovation costs prior to use
$ 27,200 S 34,000
1,500
2,900
1,400
1,400
$ 22,300
1,000
1,900
By the end of the first year, each machine had been operating 6,200 hours.
P8-3 Part 2
2. Prepare the entry to record depreciation expense at the end of year 1, assuming the following. (If no entry is required for a
transaction/event, select "No journal entry required" in the first account field.)
ESTIMATES
Residual
Value
$1,500
Depreciation Method
Hachine…
Plant Asset Disposal
Auspelmyer Company bought a machine for $175,000 five years ago and was
depreciating it on a straight-line basis over 12 years to a $25,000 salvage value.
Calculate the gain or loss and record the journal entry to record the sale, if:
a. The machine is sold for $115,000.
b. The machine is sold for $100,000.
c. The machine is sold for $112,500.
If this counts as 2 questions you can count it as such
Chapter 8 Solutions
Financial Accounting, 8th Edition
Ch. 8 - Define long-lived assets. Why are they considered...Ch. 8 - Prob. 2QCh. 8 - What are the classifications of long-lived assets?...Ch. 8 - Prob. 4QCh. 8 - Prob. 5QCh. 8 - Prob. 6QCh. 8 - Prob. 7QCh. 8 - In computing depreciation, three values must be...Ch. 8 - The estimated useful life and residual value of a...Ch. 8 - Prob. 10Q
Ch. 8 - Prob. 11QCh. 8 - Prob. 12QCh. 8 - Prob. 13QCh. 8 - Prob. 14QCh. 8 - Prob. 15QCh. 8 - Why is depreciation expense added to net income...Ch. 8 - Prob. 1MCQCh. 8 - Prob. 2MCQCh. 8 - Prob. 3MCQCh. 8 - Prob. 4MCQCh. 8 - Prob. 5MCQCh. 8 - Prob. 6MCQCh. 8 - Prob. 7MCQCh. 8 - Prob. 8MCQCh. 8 - Prob. 9MCQCh. 8 - (Chapter Supplement) Irish Industries purchased a...Ch. 8 - Prob. 1MECh. 8 - Prob. 2MECh. 8 - Prob. 3MECh. 8 - Prob. 4MECh. 8 - Computing Book Value (Double-Declining-Balance...Ch. 8 - Computing Book Value (Units-of-Production...Ch. 8 - Identifying Asset Impairment LO8-4 For each of the...Ch. 8 - Prob. 8MECh. 8 - Prob. 9MECh. 8 - Prob. 10MECh. 8 - Prob. 1ECh. 8 - Prob. 2ECh. 8 - Computing and Recording Cost and Depreciation of...Ch. 8 - Prob. 4ECh. 8 - Prob. 5ECh. 8 - Prob. 6ECh. 8 - Prob. 7ECh. 8 - Computing Depreciation under Alternative Methods...Ch. 8 - Prob. 9ECh. 8 - Prob. 10ECh. 8 - Computing Depreciation and Book Value for Two...Ch. 8 - Prob. 12ECh. 8 - Prob. 13ECh. 8 - Prob. 14ECh. 8 - Prob. 15ECh. 8 - Prob. 16ECh. 8 - Prob. 17ECh. 8 - Prob. 18ECh. 8 - Prob. 19ECh. 8 - Prob. 20ECh. 8 - Prob. 21ECh. 8 - Prob. 22ECh. 8 - Prob. 23ECh. 8 - Prob. 1PCh. 8 - Prob. 2PCh. 8 - Prob. 3PCh. 8 - Prob. 4PCh. 8 - Evaluating the Effect of Alternative Depreciation...Ch. 8 - Prob. 6PCh. 8 - Prob. 7PCh. 8 - Prob. 8PCh. 8 - Prob. 9PCh. 8 - Prob. 10PCh. 8 - Prob. 11PCh. 8 - Prob. 1APCh. 8 - Prob. 2APCh. 8 - Computing the Acquisition Cost and Recording...Ch. 8 - Prob. 4APCh. 8 - Prob. 5APCh. 8 - Prob. 6APCh. 8 - Prob. 7APCh. 8 - Prob. 1ACOMPCh. 8 - Prob. 1BCOMPCh. 8 - Prob. 1CCOMPCh. 8 - Prob. 1DCOMPCh. 8 - Prob. 1ECOMPCh. 8 - Prob. 1CPCh. 8 - Prob. 2CPCh. 8 - Prob. 3CPCh. 8 - Prob. 4CPCh. 8 - Prob. 5CPCh. 8 - Prob. 6CPCh. 8 - Prob. 7CPCh. 8 - Prob. 9CPCh. 8 - Prob. 1CC
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