Professional Simulation
I just can't figure out this problem can someone please help me with this simulation problem?
Norwel company manufactures miniature circuit boards used in wireless phones and personal organizers. On January 2, 2006, Norwel purchased a circuit board stamping machine at a retail price of $12,000. Norwel paid 5% salestax on this purchase. Norwel paid a contractor $1,400 for a specially wired platform for the machine, to ensure non-interrupted power to the machine. Norwel estimates the machine will have a 4-year useful life, with a salvage value of $2,000 at the end of 4 years. Norwel uses straight-line depreciation and employs the "half-year" convention in accounting for partial-year depreciation ( that is, it takes a half year of depreciation in the first year of an assset's useful life). Norwel's fiscal year ends on December 31.
Questions:
1.) At what amount should Norwel record the acquisition cost of the machine?
2.) What journal entry should Norwel record in 2006?
3.) At what amount will the machine be reported in Norwel's balance sheet at 12/31/07?
4.) On July 1,2008, Norwel decides to outsource its circuit board operations to Boards-R- Us Inc. As part of this plan, Norwel sells the machine (and the platform) to Boards-R- Us for $ 7,000. What is the impact of this disposal on Norwel's 2008 income before taxes?
This is the only homework problem I just can't figure out in this chapter can someone please help me out with this one?
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