At the beginning of the year, Grillo Industries bought three used machines from Freeman Incorporated....
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Accounting
At the beginning of the year, Grillo Industries bought three used machines from Freeman Incorporated. The machines immediately 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
$
9,800
$
39,000
$
22,800
Installation costs
950
2,900
2,000
Renovation costs prior to use
750
2,500
3,000
Repairs after production began
500
900
1,500
By the end of the first year, each machine had been operating 8,000 hours.
Required:
Compute the cost of each machine.
Prepare the journal entry to record depreciation expense at the end of year 1, assuming the following:
Estimates
Machine
Life
Residual Value
Depreciation Method
A
5
years
$
1,800
Straight-line
B
20,000
hours
1,400
Units-of-production
C
10
years
2,200
Double-declining-balance
Prepare the journal entry to record depreciation expense at the end of year 1, assuming the following: (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.)
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