Question

Ivanhoe Limited purchased a machine on account on April 2, 2018, at an invoice price of $378,380. On April 4, it paid $2,130 for delivery of the machine. A one-year, $3,710 insurance policy on the machine was purchased on April 5. On April 18, Ivanhoe paid $7,920 for installation and testing of the machine. The machine was ready for use on April 30.

Ivanhoe estimates the machine’s useful life will be five years or 6,054 units with a residual value of $72,200. Assume the machine produces the following numbers of units each year: 893 units in 2018; 1,547 units in 2019; 1,308 units in 2020; 1,201 units in 2021; and 1,105 units in 2022. Ivanhoe has a December 31 year end.

Determine the cost of the machine.

Cost of the machine

$

Answer 1

cost of machine - 2 a) Invoice price &- 378,380 b Delivey changes $ = 2,730 c) Installation Chaye. $ = 7,920 Total cost $ = 388,430. Simu, Insurance Ghould not be included in cost of machinavy & Depreciation Sum n cost of asset ☺ Salvage valu No. of usage life 3 88.436 € 72,200 C SOL = $ 52,705. Depreciation under sLm - $52.705 ар Чал, Depreciation $52,805 rate 388,430 ZLOPE sine = 13.57 )

Depreciation under sim. Yeas Depricabl Depreciation Acumulated Camyon 2018 $388,430 $52705 $ 52,705 335726 2019 385 715 losulo (283020 158115 230315 2020 283029 2021 230315 52705 2108 20171610 52705 263525 124905 2022 1127610 2003 72200 Isatos 1316230 719495 52.705 52705 Amout Year year 2018 2019 2020 2021 2022 Depreciation under Double decry method 97.14) @ 20 X 13.57% Depreciable depreciati Acculate I cany cast Eper depres sione $388,430 losu19 105419 283010 28301076808 182227 206201 20620155962 238189 150238 | 150238 401774 278963 109463 109463 29708 308671 79755 179755 121645 1330316 58109. 2023