Required information

PA9-1 (Algo) Computing Acquisition Cost and Recording Depreciation under Three Alternative Methods [LO 9-2, LO 9-3]

At the beginning of the year, Almond Factory bought three used machines. The machines immediately were overhauled, were installed, and started operating. Because the machines were different, each was recorded separately in the accounts. Details for Machine A are provided below.

Cost of the asset	$10,400
Installation costs	940
Renovation costs prior to use	1,020
Repairs after production began	790

PA9-1 (Algo) Part 1Required:

1. Compute the amount to be capitalized for Machine A.

Total Costs

2. Compute year 2 straight-line depreciation expense for Machine A, assuming an estimated life of 4 years and $1,000 residual value.

Year 2 straight-line depreciation expense

3. Prepare the journal entry to record year 2 straight-line depreciation expense for Machine A, assuming an estimated life of 4 years and $1,000 residual value. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

- Record the year 2 depreciation expense for Machine A.

4. Compute year 2 units-of-production depreciation expense for Machine B, assuming a capitalized cost of $47,880, an estimated life of 30,000 hours, $4,500 residual value, and actual year 2 use of 8,000 hours. (Do not round intermediate calculations.)

Year 2 units-of-production depreciation expense

5. Prepare the journal entry to record year 2 units-of-production depreciation expense for Machine B, assuming a capitalized cost of $47,880, an estimated life of 30,000 hours, $4,500 residual value, and actual year 2 use of 8,000 hours. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

-Record the year 2 depreciation expense for Machine B.

6. Compute years 1 and 2 double-declining-balance depreciation expense for Machine C, which has a cost of $26,800, an estimated life of 10 years, and $1,400 residual value.

	Year 1	Year2
Double declining balance

7. Prepare the journal entry to record year 2 double-declining balance depreciation expense for Machine C, which has a cost of $26,800, an estimated life of 10 years, and $1,400 residual value. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

-Record the year 2 depreciation expense for Machine C.