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Problem - The company purchased a machine on 1 January 2018. The information of the machine is as follows:
Costs on Acquisition on 1 February 2019:
Machine Cost (paid in cash by purchaser) $25,000
Import Tax (paid in cash by purchaser) $2,000
Delivery Fees (paid in cash by purchaser) $3,000
Depreciation Method: Reducing balance method at the rate of 40%
Residual value: $4,000
Useful Life: 5 Years
Required -
1. Prepare the journal entry for the purchase of the machine.
2. Calculate the depreciation expense for the year 2019.
3. On 1 January 2020, the machine was sold for $12,000. Prepare the journal entry for this sale.
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