On March 20 2011 FineTouch Corporation purchased two

machines at #3753
On March 20, 2011, 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, 2011, 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-declining-balance method and machine Y using the straight-line
method.Required:Prepare the journal entries to record the following:a. The purchase of each
machineb. The transportation, installation, and improvement costs for each machinec. The
depreciation expense to December 31, 2011, for each machineView Solution:
On March 20 2011 FineTouch Corporation purchased two machines at

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