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Recording Asset Acquisition, Depreciation, and Disposal $($FSET$)$

On January $2,$ Year $1,$ Verdi Company acquired a machine for $$24,000$ cash. In addition to the purchase price, Verdi spent $$500$ cash for shipping and installation, and $$700$ cash to calibrate the machine prior to use. The company estimates that the machine has a useful life of $4$ years and residual value of $$1,950.$

Use the financial statement effects template to show how the following activities affect the balance sheet and income statement:

a$.$ Acquisition of the machine including all costs incurred to prepare it for its intended use..

b$.$ Depreciation in the first year. Verdi uses the straight$-$line method of depreciation.

c$.$ Sale of the machine on December $31,$ Year $3.$ Verdi sold the machine to another company for $$3,500.$