Reference no: EM132960653
Mandy Manufacturing purchased a machine on August 1, 2019, and it was installed and ready to run on January 1, 2020. The following costs were incurred in the purchase and installation of the machine.
Invoice Price $1,400,000
Freight costs 8,000
Purchase discount 3,000
Installation costs 68,000
Electrical and power connections 33,000
Repairs to correct damage incurred during uncrating 13,000
Adjustments costs 46,000
Spare parts for future use 26,000
Provincial sales tax 84,000
Fines incurred during the transport and uploading of the machine 100
Cost of special foundation for the machine 7,000
Problem 1: Calculate the depreciable cost of the machine.
Problem 2: If the machine is expected to have 15 year useful life with resell value of $243,500 and the total production capacity of its life time is 500 million units, and its first year production was 1.2 million units. Please calculate the first year depreciation expense and provide the journal entry for the first year using production unit, straight-line and double declining methods.
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