Explore BrainMass

Explore BrainMass

    Straight line depreciation problem

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    On January 1, 2005, Solomon Company purchased the following two machines for use in its production process.

    Machine A: The cash price of this machine was $38,500. Related expenditures included: sales tax $2,200, shipping costs $175, insurance during shipping $75, installation and testing costs $50, and $90 of oil and lubricants to be used with the machinery during its first year of operation. Solomon estimates that the useful life of the machine is 4 years with a $5,000 salvage value remaining at that time period.

    Machine B: The recorded cost of this machine was $100,000. Solomon estimates that the useful life of the machine is 4 years with a $8,000 salvage value remaining at the end of that time period.

    Instructions:
    (a) Prepare the following or Machine A
    (1) The journal entry to record its purchase on January 1, 2006.
    (2) The journal entry to record annual depreciation at December 31, 2006, assuming the straight-line method of depreciation is used.

    © BrainMass Inc. brainmass.com June 3, 2020, 7:33 pm ad1c9bdddf
    https://brainmass.com/business/straight-line-depreciation/straight-line-depreciation-problem-103516

    Solution Preview

    Please see the attached file.

    1 Full working for amortizable cost and ...

    Solution Summary

    This solution provides equations in Excel for amortizable cost and annual depreciation under a straight line method and general journal entries for purchase.

    $2.19

    ADVERTISEMENT