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AP8-3 LO8-2,8-3 Computing the Acquisition Cost and Recording Depreciation under Three Alternative Methods (P8-3) At the beginning of the year, Ramos Inc. bought three

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AP8-3 LO8-2,8-3 Computing the Acquisition Cost and Recording Depreciation under Three Alternative Methods (P8-3) At the beginning of the year, Ramos Inc. bought three used machines from Santaro Corporation. The machines immediately were overhauled and started operating. The machines were different; therefore, each had to be recorded separately in the accounts. Invoice price of the asset Shipping costs Machine A Machine B $12,200 1,600 $32,500 1,100 Machine C $21,700 1,100 600 1,400 1,600 Renovation costs prior to use 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: Machine Life A 3 years B 33,000 hours 5 years ESTIMATES Residual Value $1,000 Straight-line 2,000 1,400 Depreciation Method Units-of-production Double-declining-balance Page 458

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