Purchased the machine at an invoice price of $10,000; paid $8,000 cash and signe

Question

Purchased the machine at an invoice price of $10,000; paid $8,000 cash and signed a note for the balance, payable on October 1, 2015 with annual interest at a rate of 6 percent.

Recorded straight-line depreciation on the machine based on an estimated useful life of 10 years and an estimated residual value of $1,725.

Compute the acquisition cost of the machine.

Compute the depreciation expense to be reported for 2015.

The following transactions related to a machine purchased by Vicario Company in 2015: March 1

Purchased the machine at an invoice price of $10,000; paid $8,000 cash and signed a note for the balance, payable on October 1, 2015 with annual interest at a rate of 6 percent.

March 3 Paid freight of $250. March 5 Paid installation costs of $475. October 1 Paid the balance due plus the related interest. December 31

Recorded straight-line depreciation on the machine based on an estimated useful life of 10 years and an estimated residual value of $1,725.

Explanation / Answer

Purchased the machine at an invoice price of $10,000; paid $8,000 cash and signed a note for the balance, payable on October 1, 2015 with annual interest at a rate of 6 percent.

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