Question

Blossom Company manufactures routers used in industrial modems. On May 15, 2017, Blossom purchased a precision welding machine at a retail price of $70,800. Blossom paid 5% sales tax on this purchase and hired a contractor to build a "clean" platform enclosure for the machine for $5,400. Blossom estimates the machine will have a 5-year useful life, with a salvage value of $5,900 at the end of 5 years. Blossom uses straight-line depreciation and employs the "half- year" convention in accounting for partial-year depreciation. Blossom's fiscal year ends on December 31. At what amount should Blossom record the acquisition cost of the machine? Acquisition cost of the machines SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT How much depreciation expense should Blossom record in 2017 and in 2018? Depreciation expense 2017 s Depreciation expense 2018 s

Answer 1

Purchase price of Welding Machine Add Sales Tax Platform enclosure for the machine Acquisition Cost of the Machine 70800 3540 5400 79740 Cost Price of Equipment Less Salvage Value Depreciable Value (A) Number of Years of Life (B) Depreciation Amount (A/B) 79,740 (5,900) 73,840 14,768 Year Beginning Value (A) 79,740 71,766 Depreciation Expense Accumulated Depreciation | (B) 7,974 7,974 14,768 22,742 Book Value (A -B) 71,766 56,998 2017 2018 Amount to be reported in Balance Sheet at December 31, 2018 56,998 37 38 2) Debit Credit Account title & explanation Loss on Impairment Machinery 6400 6400