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Problem
At the beginning of the year, a company bought three new machines for its production facilities. The machines were all different so each had to be recorded separately. Below are the costs related to each purchase.
Machine A
Machine B
Machine C
Amount paid for the machine
14,000
28,500
11,200
Installation cost
600
1,000
400
Delivery cost
800
Insurance cost
450
At the end of the first year, each machine had been operated 5,200 hours
Required:
Machine
Life
Residual Value
Depreciation Method
A
6 years
Straight-line
B
50,000 hours
2,000
Units-of-production
C
5 years
Double-declining-balance
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