Question
The current machinery of CCC Limited (CCC) is fully depreciated, and the technical department is concerned about the performance of the existing machinery. Considering these
The current machinery of CCC Limited (CCC) is fully depreciated, and the technical department is concerned about the performance of the existing machinery. Considering these facts, it is decided to purchase new machinery on 01 Jul 20X6. The cost of new machinery is $277 680. XYZ paid the freight cost of $4 721 and the installation cost of $6 387. This machine is expected to produce 12 000 units during its life with a residual value of $2 777. The machine produced 1500 units each year. The yearly production of this machine remains the same during its useful life. We have discussed different methods of depreciation in this unit. Please use the appropriate method of depreciation to solve this question. Ignore GST.
Required:
Determine the cost of the machine.
Assuming that year ends on 30 June, record the journal entry of depreciation expenses on 30 June 20X8.
Calculate the balance of accumulated depreciation at the end of the third year.
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