CF unit4 P8-3 At the beginning of the year, Plummer’s Sports Center bought three used fitness machines from Advantage, Inc.

P8-3 Computing the Acquisition Cost and Recording Depreciation under Three Alternative Methods LO8-2, 8-3

At the beginning of the year, Plummer’s Sports Center bought three used fitness machines from Advantage, Inc. The machines immediately were overhauled, installed, and started operating. The machines were different; therefore, each had to be recorded separately in the accounts.

	Machine A	Machine B	Machine C
Amount paid for asset	$ 11,000	$ 30,000	$ 8,000
Installation costs	500	1,000	500
Renovation costs prior to use	2,500	1,000	1,500

By the end of the first year, each machine had been operating 4,800 hours.

Required:

1 Compute the cost of each machine.

	Total Cost
Machine A
Machine B
Machine C

Required:

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

(If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

	Estimates
Machine	Life	Residual Value	Depreciation Method
A	5 years	$1,000	Straight-line
B	60,000 hours	2,000	Units-of-production
C	4 years	1,500	Double-declining-balance

Transaction	General Journal	Debit	Credit
1	Depreciation expense	10,000

11 years ago

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CF unit4 P8-3 At the beginning of the year, Plummer’s Sports Center bought three used fitness machines from Advantage, Inc.

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CF unit4 P8-3 At the beginning of the year, Plummer’s Sports Center bought three used fitness machines from Advantage, Inc.

CF unit4 P8-3 / At the beginning of the year, Plummer’s Sports Center bought three used fitness machines from Advantage, Inc.