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At the beginning of the year, Grillo Industries bought three used machines from Freeman Incorporated....

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Accounting

At the beginning of the year, Grillo Industries bought three used machines from Freeman Incorporated. The machines immediately were overhauled, were installed, and started operating. Because the machines were different, each was recorded separately in the accounts.

Machine A Machine B Machine C
Cost of the asset $ 10,500 $ 39,700 $ 23,500
Installation costs 800 3,600 2,700
Renovation costs prior to use 600 3,200 3,700
Repairs after production began 800 600 2,200

By the end of the first year, each machine had been operating 8,000 hours.

Required:

Compute the cost of each machine.

Prepare the journal entry to record depreciation expense at the end of year 1, assuming the following:

Estimates
Machine Life Residual Value Depreciation Method
A 5 years $ 2,500 Straight-line
B 20,000 hours 2,100 Units-of-production
C 10 years 2,000 Double-declining-balance

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