Vitaem Company, located in Spain, produces, and distributes Kombucha.

Kombucha is a natural fermented drink that is obtained by mixing green tea leaves with water and cane sugar, to a bacteriums colony and yeasts.

Kombucha has a lot of growth potential, and the company anticipates that if it invests in machinery, it will be able to face a 40% growth in turnover.

For this reason, the Chief Financial Officer together with the Chief Executive Officer make the decision to buy a new machine for the tea cooking automation computer control and temperatures control in the fermentation tanks, and maturation.

They organize a visit to CHINA with a very important manufacturer of this type of machinery, EFICROA.

Finally, on 15^th November 2021, the company VITAEM signs the contract for the purchase of the machine with the supplier of fixed assets.

The purchase price of the machine is 250.000 euros.

On 1^st January 2022 the machine arrives at Vitaem warehouse for its installation and assembly with the invoice issued by the vendor (250.000 euros)

Vitaem has also incurred in the following additional costs related to the machine:

• Invoice number 1 dated December 25th: maritime transport from China to Barcelona. Amount 3.000 euros
• Invoice number 2 dated December 28^th: transport insurance concept. Amount 1.000 euros
• Invoice number 3 dated 31^st December: for customs procedures and unloading at Barcelonas port and transport from Barcelonas port to VITAEM facilities. Amount: 400 euros

Due to the complexity of the machine, it needs an installation and assembly. For this service Vitaem contracts the services to the IMM Corporation for an amount of 25.000 euros.

The maintenance for the first year is 2.370 euros.

The company is considering whether to determine annual depreciation using the straight-line method or the declining method at 150 percent of the straight line rate. Vitaem expects to use the equipment for 10 years, at the end of which it will have an estimated salvage value of 4.000 euros.

In mid January 2021, the Board of Directors approved the 2021 investment budget. It included a trucks purchase for the delivery in ecological stores.

Vitaem purchased a truck for 40.000 euros. The truck is expected to be driven 24.000 km per year over a 5 year period and then sold for approximately 5.000 euros.

Vitaem distinctive trademarkt pure life has been redefine by an important british marketing agency, Lavol. Lavol has issued an invoice that accounts for 4.711 euros. Vitaem considers that will use this design for 10 years.

The 19th of February 2022, Vitaem purchased a site for 265.000 euros on which it planned to buid a flagship store. The site consisted of three acres in Delta de lEbre (Tarragona) and included an old house called masethalf in ruins and Vitaem plans to demolish it.

1. Determine which costs should be included in the cost of the asset (equipment) to calculate anual depreciation.
2. Prepare a comparison of the two alternatives methods of depreciation of the equipment: straight-line and declining method for the first two years.
3. Determine depreciation for the first year of the trucks useful life by the straight-line and units of output methods if the truck is actually driven 25.600 Km
4. Vitaem needs to book the Lavols new trademark design and it has decided that it will use the straight-line method. Please determine the depreciation amount for the first year and the book value.
5. Indicate how Vitaem should treat the maset in its financial statement Balance Sheet and explain your reasoning