Use the following information for questions 28-33. Note that these problems are presented across two separate pages.
In January of 2012, Delilah Manufacturing purchased a machine for $80,000. At the date of purchase, Delilah paid $800 to have the machine delivered. Delilah also incurred $2,300 in installation costs, $300 in costs to test the machine prior to operation, and $1,500 to fix a control panel damaged during installation. The estimated salvage value of the machine was $5,000, and Delilah estimated the machine would have a useful life of 15 years. Delilah estimates that the machine will produce 20,000 units of product during its lifetime. Where applicable, round your answers to two decimal places (e.g., 567.23).
- 28.) What is the capitalized cost of Delilah’s machine? Show your work. (5 points)
- 29.) If Delilah produces 1,500 units of product with the machine in 2012, and uses the Units of Production depreciation method, what is the depreciation expense in 2012? (3 points)
- 30.) If Delilah uses the double-declining balance depreciation method, what is the depreciation expense in 2012? (3 points)
- 31.) If Delilah uses the straight-line depreciation method, what is the depreciation expense in 2012? (3 points)
- Still assuming that Delilah uses the straight-line depreciation method, assume that at the end of three years (i.e., at the end of 2014), Delilah realizes that the machine will only last for 9 years total rather than the 15 years that were originally estimated. Using this new information, provide the depreciation expense going forward for 2015. (3 points)
- 32.) In January of 2015, accessories costing $5,200 were spent on the machine in order to improve its output and efficiency. Provide the journal entry to account for this $5,200 expenditure. (3 points).
