Question

Higher Ltd. purchased a large piece of earth-moving equipment for $5,750,000. The vehicle had six tires, each worth $175,000 and expected to last two years. This is the maximum value that should be allocated to tires. The reminder of the purchase cost, including incremental costs, was attributable 40% to the vehicle body, expected to last 6 years and 60% to the engine, expected to last 4 years. Other costs associated with the machine: 5862.500 HST, 15% of $5,750,000 cost Delivery Repair of incidental damage done during delivery Servicing and tune-up to get the machine ready to use 15200 7.250 17.500 Required: Prepare the journal entry to record the equipment and the associated expenditures. Record all items on the list plus the $5,750,000 invoice price. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transactions Journal entry worksheet Record the purchase of equipment. Note: Enter debits before credits Transaction General Journal Debit Credit Record entry Clear entry

Answer 1

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PO Intoice Price HST 15% $ 5750,00 & 862,500 Delivery $ 15200 Repairs of damage deving $ 7250 delivery up for senicing & ture ready to use $ 1750 Total Cost 6,652,450 vehicle Tyres 6 typesx 17500] = ($ 10,50,000) Remaining cost $56,02450 vehicle Body (5602450x40%) $ 2240980) vehicle Engine (5602450X60%) $3361470 S.no Accounts Title Debit (dedit vehicle Tyres $ 1050,000 Vehicle Body $ 2240980 $ 33,61,470 rehicle Engine $6,652,450 Cash record To Puzchase of Equipment note! All Expenses that are imcured to bering Fited asset to its cuvent location & t make it ready to use are to be capitalized

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