Break Free Corporation purchased a second-hand polishing machine. The entity incurred the following costs: Agreed price paid to the vendor - 8,000,000 Dismantling cost to bring the machine to its location - 400,000 Transportation charges to the entity’s factory - 350,000 Refurbishment cost prior to installation - 175,000 Assembly and Installation cost - 125,000 I. What is the cost of the second-hand machine? 8,875,000 9,050,000 8,125,000 8,000,000 Assume that the residual value of the machine is P50,000 with the following estimated useful life: Year - 5 years Service Hours - 600,000 hours Output - 1,500,000 units II. Assume further that on its first year the machine was used in operations for 150,000 hours. How much depreciation expense should be recorded by Break Free? 2,100,000 2,250,000 1,950,000 1,987,500 III. What is the depreciation rate per hour? 13 13.25 14 15 IV. Assume that on its first year the machine produced 320,000 units. How much depreciation expense should be recorded by Break Free? 1,600,000 1,690,000 1,888,000 1,920,000 V. What is the depreciation rate per unit? 5 5.30 5.90 6
Break Free Corporation purchased a second-hand polishing machine. The entity incurred the following costs:
Agreed price paid to the vendor - 8,000,000
Dismantling cost to bring the machine to its location - 400,000
Transportation charges to the entity’s factory - 350,000
Refurbishment cost prior to installation - 175,000
Assembly and Installation cost - 125,000
I. What is the cost of the second-hand machine?
8,875,000
9,050,000
8,125,000
8,000,000
Assume that the residual value of the machine is P50,000 with the following estimated useful life:
Year - 5 years
Service Hours - 600,000 hours
Output - 1,500,000 units
II. Assume further that on its first year the machine was used in operations for 150,000 hours. How much
2,100,000
2,250,000
1,950,000
1,987,500
III. What is the depreciation rate per hour?
13
13.25
14
15
IV. Assume that on its first year the machine produced 320,000 units. How much depreciation expense should be recorded by Break Free?
1,600,000
1,690,000
1,888,000
1,920,000
V. What is the depreciation rate per unit?
5
5.30
5.90
6
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