Connect Access Card for Financial Accounting
9th Edition
ISBN: 9781259738678
Author: Robert Libby, Patricia Libby, Frank Hodge Ch
Publisher: McGraw-Hill Education
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Chapter 8, Problem 8.3AP
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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Chapter 8 Solutions
Connect Access Card for Financial Accounting
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