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Question - Fistral Ltd acquires a blank-making machine - blanks are the inner foam core of a surfboard - for the following amounts:

Initial price paid to the supplier $70000

Cost to deliver the machine to the site $5000

Amount to paint the company name on the machine $1500

Amount paid to an engineer to fit the machine ready for work $35000

Insurance cover taken out on the machine $2200

Repairs made to replace bolts which had dislodged during transit $500

Required:

(i) Calculate the value of the machine for depreciation purposes. Explain your reasons for including or excluding certain items in the calculation?

(ii) Choose a method of depreciation taking into consideration the impact of each available method on yearly profits?

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M93071345
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