Financial Accounting, 8th Edition
8th Edition
ISBN: 9780078025556
Author: Robert Libby, Patricia Libby, Daniel Short
Publisher: McGraw-Hill Education
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Chapter 8, Problem 3P
1.
To determine
Ascertain the cost of Machines A, B and C.
2.
To determine
Prepare the
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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…
Question text
Depreciation Choices and Outcome.Mulligan Co. purchased a new machine on January 1. The following information pertains to the purchase:
Life of asset
5 years
Salvage value
$3,000
Purchase price
18,000
Sales tax
1,000
Freight cost
800
Electrical set-up
700
Custom programming
500
Estimated annual labor savings
3,500
Additional revenue generated
8,000
a. Determine the capitalized cost of the new machine$Answerb. Compute annual depreciation, accumulated depreciation and the machine's book value for the first three year assuming:i. Straight-line depreciationii. Double-declining-balance method
Straight-Line Depreciation
Double-Declining Balance
DepreciationExpense
AccumulatedDepreciation
Book Value atYear-end
DepreciationExpense
AccumulatedDepreciation
Book Value atYear-End
Year 1
Year 2
Year 3
c. Assume the machine is sold for $8,000 at the end of the third year after depreciation…
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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