Question 2: Asset Valuation & Depreciation. Please complete.

Blackwatch

Corp., a public company located in

Saskatchewan

, both purchases and

constructs various pieces of machinery and equipment that it uses in its operations. The

following items are for machinery that was purchased and a piece of equipment that was

constructed during the 2017 fiscal year:

Machinery

Cash paid for machinery,

including sales tax of $7,000 and recoverable GST of

$5,000

$112,000

Freight and insurance cost while in transit

2,330

Cost of moving machinery into place at factory

3,600

Wage cost for technicians to test machinery

4,400

Materials cost for testing

550

Insurance premium paid on the machinery for its first year of operation

1,400

Special plumbing fixtures required for new machinery

8,900

Repair cost on machinery incurred in first year of operations

1,600

Cash received from provincial

government as incentive to purchase machinery

25,500

Equipment (Self

-

Constructed)

Material and purchased parts (gross cost $210,000; failed to take 1% cash

discount; the company uses the net method of recording purchases of material and

parts)

$210,000

Imputed interest on funds used during construction (

Note:

the company has no

borrowing costs, but it has calculated imputed interest on its

equity/share

financing)

13,800

Labour costs manufacturing the equipment

185,000

Overhead costs (fixed

$20,300; variable $32,700)

53,000

Profit on self

-

construction

30,700

Cost of installing equipment

4,500

Required:

(round all answers to 0 decimal place)

a)

Calculate the cost of the machinery and the cost of the equipment.

b) Calculate the

depreciation for the first two years

, (use full year depreciation)

on the

machinery and equipment assuming they both have a useful life of 10 years and the

machinery has a salvage value of $10,000 and equipment of $30,000 using 1) Straight

-

line and 2) CCA