On January 1, 2014, Abraham Company purchased the following two machines for use in its production process.

Machine A: The cash price of this machine was $55,000. Related expenditures included: sales tax $2,750, shipping costs $100, insurance during shipping $75, installation and testing costs $75, and $90 of oil and lubricants to be used with the machinery during its first year of operation. Abraham estimates that the useful life of the machine is 4 years with a $6,000 salvage value remaining at the end of that time period.

Machine B: The recorded cost of this machine was $130,000. Abraham estimates that the useful life of the machine is 5 years with a $10,000 salvage value remaining at the end of that time period.



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