Expenditures After Acquisition

Roanoke Manufacturing placed a robotic arm on a large assembly machine on January 1, 2019. At that time, the assembly machine was expected to last another 3 years. The following information is available concerning the assembly machine.

Cost, assembly machine	$750,000
Accumulated depreciation, 1/1/2019	480,000

The robotic arm cost $210,000 and was expected to extend the useful life of the machine by 3 years. Therefore, the useful life of the assembly machine, after the arm replacement, is 6 years. The assembly machine is expected to have a residual value of $114,000 at the end of its useful life.

Required:

1. Prepare the journal entry necessary to record the addition of the robotic arm.

2019 Jan. 1	Equipment
	Cash
	(Addition to assembly machine)

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1. Capital expenditures increase the future economic benefits of an asset by extending the useful life, increasing efficiency, or improving the quality of the product. They are capitalized as part of the asset. Revenue expenditures do not increase the future economic benefits of the asset. They are expensed in the current period.

2. Compute 2019 depreciation expense for the machine using the straight-line method. $

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Incorrect

Prepare the necessary journal entry to record depreciation expense for 2019.

2019 Dec. 31	Depreciation Expense
	Accumulated Depreciation
	(Record depreciation expense)

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2. Straight-line depreciation allocates the depreciable cost over the useful life of the asset.

3. What is the book value of the machine at the end of 2019? $