Question

Sandhill Co. purchased machinery on January 1 at a list price of $410000, with credit terms 2/10, n/30. Payment was made within the discount period. Sandhill paid $75500 sales tax on the machinery, and paid installation charges of $5400. Prior to installation, Sandhill paid $11300 to pour a concrete slab on which to place the machinery. What is the total cost of the new machinery? O $502200 O $494000. O $477300. O $482700.

Answer 1

1. Answer: $482,700

Calculations:

Purchase price [$410,000 x 0.98]	$401,800
Sales tax	$75,500
Installation charges	$5,400
Total cost of machinery	$482,700

2.Answer: $42,000

Calculations:

Book value, at Jan 1, 2016	$280,000
Accumulated depreciation for 2016 [$280,000/4]	($70,000)
Book value, at Jan 1, 2017	$210,000
÷ Remaining useful life [6 years - 1 year]	5 years
= Revised depreciation expense for 2017	$42,000

3. Answer: 3.0 years

Calculations:

Cost	$35,000
Salvage value	($7,000)
Depreciable value	$28,000
÷ Depreciation expense	$3,500
= Total number of useful life	8.0 years
Number of years lapsed [$17500/$3,500]	-5.0 years
Remaining useful life	3.0 years

4. Answer: $16,000

Calculations:

Cost	$75,000
Salvage value	($11,000)
Depreciable value	$64,000
÷ Useful life	4 years
=Depreciation expense	$16,000

In straight-line method depreciation expense is constant for every year. So, year 2 depreciation is expense is $16,000