Hugo Ltd Has Acquired a Machine for $26 000 and It

question 51

Multiple Choice

Hugo Ltd has acquired a machine for $26 000 and it cost a further $2000 to install and set up the machine for operation.It is expected to operate within normal parameters for 6 years.It will be technologically obsolete in 10 years.The expected salvage values are $1500 after 10 years and $2000 after 6 years.The benefits to be derived from the machine are expected to be greater in the early years of its life.What depreciation should be charged in each of the first twp years of the equipment's life using sum-of-digits depreciation?

• A) Year 1: $8000, Year 2: $6667.67, Year 3: $5333.33
• B) Year 1: $4818.18, Year 2: $4336.36, Year 3: $3854.55
• C) Year 1: $7428.57, Year 2: $6190.48, Year 3: $4952.38
• D) Year 1: $4333.33, Year 2: $4333.33, Year 3: $4333.33

Distinguish between tangible and intangible capital through real-world examples.

Grasp the significance of capital investment in enhancing productivity and economic growth.

Appreciate the concept of social and public capital in contributing to the collective welfare.

Understand the methods of measuring a firm’s capital and investment.

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Definitions:

Job-order Costing

An accounting method that assigns costs to specific jobs or batches, useful for customized orders or distinct products.

Direct Labor

The wages and other compensation for employees who are directly involved in the production of goods or services.

Manufacturing Overhead

All manufacturing costs that are not directly attributable to a product’s production, such as indirect materials and labor.

Raw Materials

Fundamental materials in their raw, altered, or partially processed forms utilized as input for manufacturing.