Reference no: EM13377581

Problem

At the beginning of the year, a company bought three new machines for its production facilities. The machines were all different so each had to be recorded separately. Below are the costs related to each purchase.

	Machine A	Machine B	Machine C
Amount paid for the machine	14,000	28,500	11,200
Installation cost	600	1,000	400
Delivery cost	600	800	600
Insurance cost	450	600	400

At the end of the first year, each machine had been operated 5,200 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:

Machine	Life	Residual Value	Depreciation Method
A	6 years	1,000	Straight-line
B	50,000 hours	2,000	Units-of-production
C	5 years	1,000	Double-declining-balance