Question

Required information [The following information applies to the questions displayed below.) At the beginning of the year, Plummer's Sports Center bought three used fitness machines from Brunswick Corporation. The machines immediately were overhauled, installed, and started operating. The machines were different; therefore, each had to be recorded separately in the accounts. Invoice price paid for asset Installation costs Renovation costs prior to use Machine A $ 26,300 2,200 3,400 Machine B $ 32,900 2,400 1,100 Machine C $ 9,700 900 3,400 By the end of the first year, each machine had been operating 6,600 hours. 2. Prepare the entry to record depreciation expense at the end of Year 1, assuming the following. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) ESTIMATES Life Machine A 9 years Residual Value $2,200 3,400 1,800 Depreciation Method Straight-line Units-of-production Double-declining-balance 66,000 hours B C 5 years

Answer 1

Based on the information available in the question, we can answer as follows:-

Step 1:- Calculate the Cost of the asset

Particulars	Machine A	Machine B	Machine C
Invoice price paid for asset	26,300	32,900	9,700
Installation costs	2,200	2,400	900
Renovation costs prior to use	3,400	1,100	3,400
Cost of the asset	31,900	36,400	14,000

Step 2:- Calculate the Depreciation expense

Machine A = (Cost of the asset - Salvage value)/Estimated life of the asset

Machine A = ($31,900 - $2,200)/9 years

Depreciation expense Machine A = $3,300 per year

Machine B = (Cost of the asset - Salvage value)/Estimated no.of hours

Machine B = ($36,400 - $3,400)/66,000 hours

Machine B = $0.5 per hour

Machine B = 6,600 hours * $0.5 per hour

Depreciation expense Machine B = $3,300

Machine C = 100/Estimated life of asset * 2

Machine C = 100/5 * 2

Machine C = 20 * 2

Machine C = 40%

Depreciation expense = $14,000 * 40%

Depreciation expense Machine C = $5,600

Total Depreciation expense = $3,300 + $3,300 + $5,600

Total Depreciation expense = $12,200

The journal entry to record the depreciation expense is :-

December 31	Depreciation expense A/c	12,200
	To Accumulated Depreciation - Office building		12,200
	(To record the depreciation expense)