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Presentation/PPT
27/08/2022
Question 2: Asset Valuation & Depreciation. Please complete.
Blackwatch Corp., a public company located in Saskatchewan, both purchases and constructs various pieces of machinery and equipment that it uses in its operations. The following items are for machinery that was purchased and a piece of equipment that was constructed during the 2017 fiscal year:
Machinery
Cash paid for machinery, including sales tax of $7,000 and recoverable GST of $5,000
$112,000
Freight and insurance cost while in transit
2,330
Cost of moving machinery into place at factory
3,600
Wage cost for technicians to test machinery
4,400
Materials cost for testing
550
Insurance premium paid on the machinery for its first year of operation
1,400
Special plumbing fixtures required for new machinery
8,900
Repair cost on machinery incurred in first year of operations
1,600
Cash received from provincial government as incentive to purchase machinery
25,500
Equipment (Self Constructed)
Material and purchased parts (gross cost $210,000; failed to take 1% cash discount; the company uses the net method of recording purchases of material and
parts)
$210,000
Imputed interest on funds used during construction (Note:the company has no borrowing costs, but it has calculated imputed interest on its
equity/share financing)
13,800
Labour costs manufacturing the equipment
185,000
Overhead costs (fixed $20,300; variable $32,700)
53,000
Profit on self construction
30,700
Cost of installing equipment
4,500
Required:
(round all answers to 0 decimal place)
a) Calculate the cost of the machinery and the cost of the equipment.
b) Calculate the depreciation for the first two years, (use full year depreciation) on the machinery and equipment assuming they both have a useful life of 10 years and the machinery has a salvage value of $10,000 and equipment of $30,000 using 1) Straight line and 2) CCA
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