On January 1, 2022, Kingbird Company purchased the following two machines for use in its production process. Machine A: Machine B: The cash price of this machine was $40,000. Related expenditures also paid in cash included: sales tax $2,250, shipping costs $100, insurance during shipping $70, installation and testing costs $100, and $100 of oil and lubricants to be used with the machinery during its first year of operations. Kingbird estimates that the useful life of the machine is 5 years with a $4,400 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used. The recorded cost of this machine was $180,000. Kingbird estimates that the useful life of the machine is 4 years with a $11,520 salvage value remaining at the end of that time period.

On January 1, 2022, Kingbird Company purchased the following two machines for use in its production process. Machine A: Machine B: The cash price of this machine was $40,000. Related expenditures also paid in cash included: sales tax $2,250, shipping costs $100, insurance during shipping $70, installation and testing costs $100, and $100 of oil and lubricants to be used with the machinery during its first year of operations. Kingbird estimates that the useful life of the machine is 5 years with a $4,400 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used. The recorded cost of this machine was $180,000. Kingbird estimates that the useful life of the machine is 4 years with a $11,520 salvage value remaining at the end of that time period.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 8PB: Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is...

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