final review session problems

final review session problems - Problem 1 On January 1,...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Problem 1 On January 1, 2008, Arlo Company purchased the following two machines for use in its production process: Machine A: The cash price of this machine was $55,000. Related expenditures included: sales tax $2,750, shipping costs $100, insurance during shipping $75, installation and testing costs $75, and $90 of oil and lubricants to be used with the machinery during its first year of operation. Arlo estimates that the useful life of the machine is 4 years with a $5,000 salvage value remaining at the end of that time period. Machine B: The recorded cost of this machine was $100,000. Arlo estimates that the useful life of the machine is 4 years with a $10,000 salvage value remaining at the end of that time period. Instructions (a) Prepare the following for Machine A. (1) The journal entry to record its purchase on January 1, 2008. (2) The journal entry to record annual depreciation at December 31, 2008, assuming the straight-line method of depreciation is used. (b) Calculate the amount of depreciation expense that Arlo should record for machine B each year of its useful life under the following assumption.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 3

final review session problems - Problem 1 On January 1,...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online