At the beginning of the year, Young Company bought three used machines from Vince, Inc. The machines immediately were overhauled, were installed, and started operating. Because the machines were different, each was recorded separately in the accounts.

By the end of the first year, each machine had been operating 7,000 hours.
Required:
1. Compute the cost of each machine. Explain the rationale for capitalizing or expensing the various costs.
2. Give the journal entry to record depreciation expense at the end of year 1, assuming the following:

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Machine A Machine B Machine C Amount paid for asset Installation costs Renovation costs prior to use Repairs after production began $7.600 200 1.500 400 $25,600 600 1.200 350 $9.300 500 1,000 325 Estimates Machine Life Residual Value Depreciation Methoc 5 years 40,000 hours 6 years Straight-line Units-of-production Double-declining-balance $ 600 ,000 2000