At the beginning of the year, Grillo Industries bought three used machines from Freeman Incorporated. The machinas Amediately
were overhauled, were installed, and started operating. Because the machines were different, each was recorded separately in the
accounts.
Machine A Machine B Machine C
Cost of the asset
$10,400
$39,600
$23,400
Installation costs
1,000
3,500
2,600
Renovation costs prior to use
800
3,100
3,600
Repairs after production began
700
1,000
2,100
By the end of the first year, each machine had been operating 8,000 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:
Residual Value Depreciation Method
Estimates
Machine
Life
A
5 years
B
20,000 hours
C
10 years
$2,400
2,000
1,900
Straight-line
Units-of-production
Double-declining-balance
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