Computing the Acquisition Cost and Recording Depreciation under Three Alternative Methods – At the beginning of the year, Ramos Inc. bought three used machines from Santaro Corporation. The machines immediately were overhauled, installed, and started operating. The machines were different; therefore, each had to be recorded separately in the accounts.
Cost of the asset
Renovation costs prior to use
By the end of the first year, each machine had been operating 7,000 hours.
1. Compute the cost of each machine.
2. Give the entry to record depreciation expense at the end of year 1, assuming the following: