Question

Help Save & Exit Submit At the beginning of the year, Young Company bought three used machines from Vince, Inc. The machines immediately were overhauled, were installed, and started operating. Because the machines were different, each was recorded separately in the accounts Machine C 2.85 Joints $9.900 Machine $7.900 200 2,100 Amount paid for a t Installation costs Renovation costs prior to use Repairs after production began Machines $26,200 600 1,500 410 S00 1,900 By the end of the first year, each machine had been operating 7.000 hours Required: 1. Compute the cost of each machine. 2. Prepare the journal entry to record depreciation expense at the end of year 1, assuming the following: TIP: Remember that the formula for double-declining-balance uses cost minus accumulated depreciation (not residual value) Machine Estimates Residual Value 5 years $ 600 50,000 hours 5 years 2.400 Depreciation Method Straight line Units of production Double-declining balance 600 Complete this question by entering your answers in the tabs below.

Answer 1

Requirement 1

	Total Cost of Machine
Machine A	$    10,200.00
Machine B	$    28,300.00
Machine C	$    12,300.00

Working

	Amount paid for assets	Installation cost	Renovation cost	Total Cost of Machine
Machine A	$         7,900.00	$            200.00	$           2,100.00	$    10,200.00
Machine B	$       26,200.00	$            600.00	$           1,500.00	$    28,300.00
Machine C	$         9,900.00	$            500.00	$           1,900.00	$    12,300.00

Requirement 2

Transaction	General Journal	Debit	Credit
1..	Depreciation expense	$       9,898.00
	Accumulated depreciation-Machine A		$        1,920.00
	Accumulated depreciation-Machine B		$        3,878.00
	Accumulated depreciation-Machine C		$        4,100.00
	(To record depreciation expense)

Working

Straight line Method
A	Cost	$ 10,200
B	Residual Value	$ 600
C=A - B	Depreciable base	$ 9,600
D	Life [in years left ]	5
E=C/D	Annual SLM depreciation	$               1,920.00

.

Units of Production method
A	Cost	$ 28,300
B	Residual Value	$ 600
C=A - B	Depreciable base	$ 27,700
D	Usage in units(in Hours)	50000
E	Depreciation per hour	$                        0.55

.

Depreciation schedule-Units of Activity
Year	Book Value	Usage	Depreciation expense	Ending Book Value	Accumulated Depreciation
1	$                28,300	7000	$                      3,878	$                    24,422	$               3,878

.

Double declining Method
A	Cost	$ 12,300
B	Residual Value	$ 2,400
C=A - B	Depreciable base	$ 9,900
D	Life [in years]	6
E=C/D	Annual SLM depreciation	$ 1,650
F=E/C	SLM Rate	16.67%
G=F x 2	DDB Rate	33.33%

.

Depreciation schedule-Double declining
Year	Beginning Book Value	Depreciation rate	Depreciation expense	Accumulated Depreciation	Ending Book Value
1	$ 12,300	33.33%	$ 4,100	$ 4,100	$ 8,200