At the beginning of the year, Young Company bought three used machines from Vince, Inc. The...

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At the beginning of the year, Young Company bought three used machines from Vince, Inc. The machines immediately were overhau

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Journal entry worksheet < Record the depreciation expense for the three used machines at the end of year 1 Note: Enter debits

business accounting

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Answer 1

Answer #1

1) Calculation of Cost of Machine:-

Cost comprises Amount paid for the asset, Installation cost and Renovation cost prior to the use of the asset.

Amount incurred on repairs after the beginning of production doesn't form part of cost of the asset.

Therefore, Cost of Machines = Amount paid for Machines + Installation costs + Renovation cost prior to use

Cost of Machine Machine A $9,500 Machine B $27,600 Machine C $11, 100

2) Depreciation as per Straight Line Method = (Cost - Residual Value) / Estimated Life of Asset

Depreciation as per Unit of Production Method = (Cost - Residual Value) * Unit produced during the year / Estimated Total production

Depreciation as per Double declining balance Method = (Cost - Accumulated Depreciation) * Double declining depreciation rate

Where,

Double declining depreciation rate = Straight-line depreciation rate * 2

Following are the Journal Entries:-

Credit Transaction General Journal Debit Depreciation [($9,500-$200)/5] $1,860 - Dr 1 $1,860 Machine A (Being depreciation ch

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