PA9-1 Computing Acquisition Cost and Recording Depreciation under Three Alternative Methods LO 9-2, 9-3 At the beginning of the year, Grillo Industries bought three used machines. The machines immediately were overhauled, were installed, and started operating. Because the machines were different, each was recorded separately in the accounts. Details for Machine A are provided below. Cost of the asset Installation costs Renovation costs prior to use Repairs after production began $9,000 800 600 500 Required: 1. Compute the amount to be capitalized for Machine A. Explain the rationale for capitalizing or expensing the various costs. 2. Compute year 2 straight-line depreciation expense for Machine A, assuming an estimated life of four years and $1,000 residual value. 3. Give the journal entry to record year 2 depreciation expense for Machine A.