Question
Smith company purchased a machine on December 2, 2021, add an invoice price of 45,000 with term 3/10, net of 30. On December 6, 2021,
Smith company purchased a machine on December 2, 2021, add an invoice price of 45,000 with term 3/10, net of 30.
On December 6, 2021, Smith paid $540 for the delivery of the machine.
On December 10, 2021, smith borrowed money to pay the required amount for the machine.
On December 31, 2021, smith paid 1300 plus 7% PST and 5% GST. For final installation and testing of machine, Smith also paid 1900 for interest on the borrowed money.
The machine was ready to use on January 1, 2022. It was estimated useful life of five years (after installation and testing) and residue of the value of 8000. Partial amortization should be based on months.
Compute what should be recorded cost of machine on January 1, 2022
Assume that on January 1, 2022, cost of machine should be 47,900. What is the difference in the amount of amortization expense that should be recorded in 2022 if a straight-line method is used versus the double decline method
Assume January 1st, 2022, the cost of machine should be 47,000 and further assume that is miss always used a straight-line method of amortization. On March 31, 2020, for acute computerized control panel costing 5700 was added to the machine. Engineer estimated that it will extend the useful life of the machine by two years and will result in a revised resident will value of 11,200
1a) what should be recorded cost of machine?
1b) and recorded amount of the accumulated amortization related to the machine as of December 31, 2024
Assume that on December 31, 2022, is mid exchange is existing machine in return for a similar new one along with the exchange you receive 3900 of cash. The new machine has a fair value of 39,000 while the existing fair value is unknown, prepare the general entry for this transaction.
1c) The transaction lacks commercial substance
1d) The transaction has commercial substance
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