Expenditures after Acquisition}

Rimouski Manufacturing placed a robotic arm on a large assembly machine on January 1, 2018. At the time, the assembly machine, which was acquired on January 1, 2011, was estimated to last another three years. The following information is available concerning the assembly machine.

The robotic arm cost \(\$ 225,000\) and was estimated to extend the useful life of the machine by three years. Therefore, the useful life of the assembly machine, after the arm replacement, is six years. The assembly machine is estimated to have a residual value of \(\$ 120,000\) at the end of its useful life.
\section*{Required:}
1. Prepare the journal entry necessary to record the addition of the robotic arm.
2. Compute 2018 depreciation expense for the machine using the straight-line method, and prepare the necessary journal entry.
3. What is the book value of the machine at the end of 2018 ?
4. CONCEPTUAL CONNECTION What would have been the effect on the financial statements if Rimouski had expensed the addition of the robotic arm?
\section*{OBJECTIVE 5 Exercise

Transcribed Image Text:

Cost, assembly machine Accumulated depreciation, 1/1/2018 $750,000 480,000