The Alexander Company acquired three used machine tools for a total price of \(\$ 49,000\). Costs to transport the machine tools from the seller to Alexander Company's factory were \(\$ 1,000\). The machine tools were renovated, installed, and put to use in manufacturing the firm's products. The costs of renovation and installation were as follows:

The machine tools have the following estimated remaining lives: tool \(\mathrm{A}-4\) years; tool \(\mathrm{B}-\) 10 years; tool \(\mathrm{C}-6\) years.
a Assume that each machine tool is capitalized in a separate asset account and that the remaining life of each machine tool is used as the basis for allocating the joint costs of acquisition. Compute the depreciable cost of each of the three machine tools.
b Present journal entries to record depreciation charges for years 1,5 , and 8 , given the assumption in part

a. Use the straight-line method.
c Assume that the three machine tools are treated as one composite asset in the accounts. If management decides to depreciate the entire cost of the composite asset on a straightline basis over 10 years, what is the depreciation charge for each year?
d Which treatment, a or \(\mathbf{c}\), should management of the Alexander Company probably prefer for tax purposes and why?

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Renovation Costs Installation Costs Machine Tool A $1,700 300 Machine Machine Tool B Tool C $800 $950 550 250