Financial Accounting, IFRS International Financial Reporting Standards Section 1 Fixed Asset Costs On May 19, 2020, Sinnott Corporation purchased two...
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Financial Accounting, IFRS International Financial Reporting StandardsSection 1 Fixed Asset Costs 

On May 19, 2020, Sinnott Corporation purchased two pieces of used equipment for $600,000 as a package deal. Immediately after the purchase, Sinnott had the two pieces of equipment appraised and the processing equipment had a fair value of $372,000 and the packaging equipment had a fair value of $248,000

Sinnott paid $10, 000 in transportation costs to get both pieces of equipment to the company's manufacturing facility.

Sinnott also paid $4000 for installation for the processing equipment and $12,000 in installation for the packaging equipment. All of the installation work was completed on July 1, 2020 and Sinnott began to use the equipment.


Sinnott expects the processing equipment to have a useful life of 5 years and a residual value of $70,000.


The packaging equipment is expected to have a useful life of 7 years and a residual value of $46, 000. Sinnott used straight line method for both pieces of equipment.


Record the purchase using two asset accounts: Processing Equipment and "Packaging Equipment" with "Processing Equipment" First

Record the purchase using two asset accounts: Processing Equipment and "Packaging Equipment" with "Processing Equipment" First


Provide Journal Entry

Debit       Amount $

Debit                                       Amount

Credit .                                    Amount

Record the transportation costs for each machine - using the same order

Provide Journal Entry

Dr                    Amount

Dr Amount

Cr. Amount


Record the installation costs for each machine - using the same order

Provide Journal Entry

Debit account     Amount

Debit  account                                     Amount

Credit account                                    Amount


The depreciation expense for the year end December 31, 2020 for each machine. Do each journal entry separately. For simplicity use the general account titles of Depreciation Expense and Accumulated Depreciation


Provide Journal Entry

Processing Equipment:

Dr                             Amount

 Cr. Amount


Provide Journal Entry 

Packaging Equipment:

Dr                           Amount

Cr. Amount

 

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Journal Entries.pngDepreciation Schedule.png

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