A machine is purchased at the beginning of 2015 for $42,000. Its estimated life is eight years.

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A machine is purchased at the beginning of 2015 for $42,000. Its estimated life is eight years. Freight costs on the machine are $3,000. Installation costs are $1,600. The machine is estimated to have a residual value of $600 and a useful life of 32,000 hours. It was used 3,000 hours in 2015.

1. What is the cost of the machine for accounting purposes?

2. Compute the depreciation charge for 2015 using (a) the straight-line method and (b) the service hours method.

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Intermediate Accounting

ISBN: 978-1133957911

19th edition

Authors: Earl K. Stice, James D. Stice

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