Question
The company purchased a machine on 1 January 2018. The information of the machine is as follows: Costs on Acquisition on 1 January 2018: Machine
The company purchased a machine on 1 January 2018. The information of the machine is as follows:
Costs on Acquisition on 1 January 2018:
Machine Cost (paid in cash by purchaser)
Import Tax (paid in cash by purchaser)
Delivery Fees (paid in cash by purchaser)
$25,000
$2,000
$3,000
Depreciation Method:
Reducing balance method at the rate of 40%
Residual value:
$4,000
Useful Life:
5 Years
1. Prepare the journal entry for the purchase of the machine. (1 Marks)
2. Calculate the depreciation expense for the year 2019. (2 Marks)
3. On 1 January 2020, the machine was sold for $12,000. Prepare the journal entry for this sale. (4 Marks)
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