Answer:
1.Cost of the benefit incorporates the price tag and any coincidental expenses caused to make the advantage put to utilize. Any costs made after the advantage is put to utilize will be expensed, with the exception of if those expenses are made to build the acquiring limit significantly. So minor fixes to the benefits will be expensed and not capitalized.
In the inquiry, Cost of the benefit will incorporate Installation expenses and remodel costs preceding use.
Cost of Machine A will be $9,100 + $850 + $650 = $10,600
Cost of Machine B will be $38,300 + $2,200 + $1,800 = $42,300
Cost of Machine C will be $22,100 + $1,300 + $2,300 = $25,700
2. Machine A – Life of the advantage is 5 years and leftover worth is 1,100. Utilizing straight line deterioration strategy, devaluation will be (Cost of the Machine – Residual worth)/Life of the advantage = ($10,600 - $1,100)/5 = $1,900
Machine B – Estimated units of creation is 20,000 hours and leftover worth is $2,300. Hours worked during it were 8,000. Utilizing Units-of-creation technique, devaluation will be (Cost of the machine – Residual worth) * (Units utilized during the year/Life units) = ($42,300 - $2,300) * (8,000/20,000) = $16,000
Machine C – Life of the advantage is 10 years and remaining worth is 1,500. Utilizing twofold declining balance strategy, first devaluation rate is determined. Here existence of the advantage is 10 years. So the rate is 100%/10 = 10%. As it is a twofold declining strategy, the devaluation rate will be 10% * 2 = 20%. Consistently, this rate is applied on the diminished parity of the benefit esteem. In the most recent year, deterioration is applied distinctly to the degree of remaining worth. Presently we won't talk about all the estimation. Let us the devaluation toward the finish of year 1. That will be Cost of the benefit * Depreciation rate = $25,700 * 20% = $5,140.
