Question
End of Chapter Exercise 5.23 Dove Ltd operates a factory that contains a large number of machines designed to produce knitted garments. These machines are
End of Chapter Exercise 5.23
Dove Ltd operates a factory that contains a large number of machines designed to produce knitted garments. These machines are generally depreciated at 10% p.a. on a straight-line basis. In general, machines are estimated to have a residual value on disposal of 10% of cost. At 1 July 2017, Dove Ltd had a total of 64 machines, and the statement of financial position showed a total cost of $353,000 and accumulated depreciation of $109,000. During 2017?18, the following transactions occurred:
1. | On 1 September 2017, a new machine was acquired for $13,000. This machine replaced two other machines. One of the two replaced machines was acquired on 1 July 2014 for $6,900. It was traded in on the new machine, with Dove Ltd making a cash payment of $7,400 on the new machine. The second replaced machine had cost $7,600 on 1 April 2015 and was sold for $6,100. |
2. | On 1 January 2018, a machine that had cost $3,400 on 1 July 2008 was retired from use and sold for scrap for $420. |
3. | On 1 January 2018, a machine that had been acquired on 1 January 2015 for $5,900 was repaired because its motor had been damaged from overheating. The motor was replaced at a cost of $4,000. It was expected that this would increase the life of the machine by an extra 2 years. |
4. | On 1 April 2018, Dove Ltd fitted a new form of arm to a machine used for putting special designs onto garments. The arm cost $1,000. The machine had been acquired on 1 April 2015 for $8,400. The arm can be used on a number of other machines when required and has a 15-year life. It will not be sold when any particular machine is retired, but retained for use on other machines |
1.record each transaction
2.determine the depreciation expense
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started