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ezto.mheducation.com vas mizzou-Yahoo Search Results Yahoo Sea... 2017FS ACCTCY 2036 Prestigiacomo- Accounting I value: 5.00 points At the beginning of the year, Young Company bought three used machines from Vince, Inc. The machines immediately were overhauled, were installed, and started operating. Because the machines were different, each was recorded separately in the accounts. Amount paid for asset Installation costs Renovation costs prior to use Repairs after production began Machine A Machine B Machine C $7,850 $26,100 $9,800 850 1,450 400 450 2,000 450 750 1,750 450 By the end of the first year, each machine had been operating 6,000 hours Required: 1. Compute the cost of each machine. Cost of Machine Machine A Machine B Machine C 2. Prepare the journal entry to record depreciation expense at the end of year 1, assuming the following: (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)Explanation / Answer
Answer : The Cost of the machine (s) will be the cost that is to be capitalized in the books of account. As per Accounting Standards, all the costs that are related to the asset, incurred to make the asset ready for use, will have to bbe capitalized as the cost of the asset.
In the above case, all the cost (prior) to time the asset was put to use, will form the 'cost' of asset. The expense of 'repairs' after production began will not be added to the cost, instead it will be an expense and taken to Income Statement.
Requirement 1: the cost of Assets
Cost machine A Machine B Machine C Amount paid for asset 7850 26100 9800 Installation cost 450 850 750 Renovation cost before use 2000 1450 1750 Repairs Not considered as 'cost' of asset Cost of the asset capitalized 10300 28400 12300Related Questions
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