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Fistral Ltd acquires a blank-making machine - blanks are the inner foam core of a surfboard - for the following amounts:
A. 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;
(iii) Discuss when and why you might consider revaluing this asset.
