Acct 2 × Ci, Cezto.mheducation.com/hm.tpx hapter 9 Homework Question 1 (of 10) 3

Question

Acct 2 × Ci, Cezto.mheducation.com/hm.tpx hapter 9 Homework Question 1 (of 10) 3.00 points At the beginning of the year, Grillo Industries bought three used machines from Freeman Incorporated. The machines immediately were overhauled, were installed, and started operating. Because the machines were different, each was recorded separately in the accounts. Cost of the asset Installation costs Renovation costs prior to use Repairs after production began Machine A Machine B Machine C 11,000 $40,200 $24,000 4,100 3,700 1,050 850 901.100 3,200 4,200 2,700 By the end of the first year, each machine had been operating 8,000 hours Required: 1. Compute the cost of each machine Cost of Machine DOLL

Explanation / Answer

Req 1 Cost of machines: Machine A: (11000+1050+850) 12900 Machine B: (40200+4100+3700) 48000 Machine C: (24000+3200+4200) 31400 Note: Repairs after start of production shall not be considered for cost rather treated as expense. Req 2: Depreciation on machine-A: Cost: 12900 salvage:3000 Life: 5 years Annual depreciation: Cost -salvage / life: (12900-3000)5: $ 1980 MachineB: cost: 48000 Salvage: 2600 Life: 20,000 hours Depreciation per hour: 48000-2600 /20,000 = $2.27 per hour Depreciation for year:8000 hours @2.27 = $18,160 Machine C: Rate of Slm: 10% Rate of depreciation under DDM: 20% Machine cost: 31400 Depreciation =31400*20%= 6280 Journal Entry: Depreciation expense Dr. 26420        Accumulated Depreciation-Machine A 1980        Accumulated Depreciation-Machine B 18160        Accumulated Depreciation-Machine C 6280

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