Question

Sandhill Limited purchased a machine on account on April 2, 2018, at an invoice price of $332,220. On April 4, it paid $2,170 for delivery of the machine. A one-year, $3,960 insurance policy on the machine was purchased on April 5. On April 18, Sandhill paid $7,840 for installation and testing of the machine. The machine was ready for use on April 30. Sandhill estimates the machine's useful life will be five years or 6,153 units with a residual value of $77,180. Assume the machine produces the following numbers of units each year: 953 units in 2018; 1,483 units in 2019; 1,279 units in 2020; 1,390 units in 2021; and 1,048 units in 2022. Sandhill has a December 31 year end. Your answer is correct. Determine the cost of the machine. Cost of the machine 342230

Answer 1

Year	Opening Carrying amount	Depreciation expense	Accumulated Depreciation	Carrying amount
2018	342230	91261	91261	250969
2019	250969	100388	191649	150581
2020	150581	60232	251881	90349
2021	90349	13169	265050	77180
2022	77180	0	265050	77180
2023	77180	0	265050	77180

Cost of asset	342230
Less: Residual value	77180
Depreciable cost	265050
An Asset cannot be depreciated below it's Depreciable cost
Depreciation for 2021	13169	=90349-77180