Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

At the beginning of the year, Grillo Industries bought three used machines from Freeman Incorporated. The machines immediately were overhauled, installed, and started operating. Because

At the beginning of the year, Grillo Industries bought three used machines from Freeman Incorporated. The machines immediately were overhauled, installed, and started operating. Because the machines were different, each was recorded separately in the accounts.

Machine A Machine B Machine C
Cost of the asset $ 9,000 $ 38,200 $ 22,000
Installation costs 800 2,100 1,200
Renovation costs prior to use 600 1,700 2,200
Repairs after production began 500 600 700

By the end of the first year, each machine had been operating 8,000 hours.

Required:
1. Compute the cost of each machine.
2.

Prepare the journal entry to record depreciation expense at the end of year 1, assuming the following: (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.)

Estimates

Machine Life Residual Value Depreciation Method
A 4 years $ 1,000 Straight-line
B 30,000 hours 4,500 Units-of-production
C 10 years 1,400 Double-declining-balance

  • 1.

    Record the depreciation expense for the three used machines at the end of year 1 assuming each machine has its own accumulated depreciation account.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing Beyond Compliance Using The Portable Universal Quality Lean Audit Model

Authors: Janet Bautista Smith

1st Edition

0873898400, 9780873898409

More Books

Students also viewed these Accounting questions