Goldman SA bought a machine on June 1, 2020, for 31,800, f.o.b. the place of manufacture. Freight

Question:

Goldman SA bought a machine on June 1, 2020, for €31,800, f.o.b. the place of manufacture. Freight to the point where it was set up was €200, and €500 was expended to install it. The machine’s useful life was estimated at 10 years, with a residual value of €2,500. On June 1, 2021, an essential part of the machine is replaced, at a cost of €2,700, with one designed to reduce the cost of operating the machine. The book value of the old part is estimated to be €900.

On June 1, 2024, the company buys a new machine of greater capacity for €35,000, delivered, trading in the old machine, which has a fair value and trade-in allowance of €20,000. To prepare the old machine for removal from the plant cost €75, and expenditures to install the new one were €1,500. It is estimated that the new machine has a useful life of 10 years, with a residual value of €4,000 at the end of that time. The exchange has commercial substance.


Instructions

Assuming that depreciation is to be computed on the straight-line basis, compute the annual depreciation on the new equipment that should be provided for the fiscal year beginning June 1, 2024.

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Related Book For  book-img-for-question

Intermediate Accounting IFRS

ISBN: 9781119607519

4th Edition

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield

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