On March 20 2016 FineTouch Corporation purchased two

machines at #252
On March 20, 2016, FineTouch Corporation purchased two machines at auction for a combined
total cost of $236,000. The machines were listed in the auction catalogue at $110,000 for
machine X and $155,000 for machine Y. Immediately after the auction, FineTouch had the
machines professionally appraised so it could increase its insurance coverage. The appraisal
put a fair value of $105,000 on machine X and $160,000 on machine Y.On March 24,
FineTouch paid a total of $4,500 in transportation and installation charges for the two machines.
No further expenditures were made for machine X, but $6,500 was paid on March 29 for
improvements to machine Y. On March 31, 2016, both machines were ready to be used.The
company expects machine X to last five years and to have a residual value of $3,800 when it is
removed from service, and it expects machine Y to be useful for eight more years and have a
residual value of $14,600 at that time. Due to the different characteristics of the two machines,
different depreciation methods will be used for them: machine X will be depreciated using the
double-diminishing-balance method and machine Y using the straight-line
method.Required:Prepare the journal entries to record the following:a. The purchase of the
machines, indicating the initial cost of eachb. The transportation, installation, and improvement
costs for each machinec. The depreciation expense to December 31, 2016, for each
machineView Solution:
On March 20 2016 FineTouch Corporation purchased two machines at

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