FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Exchanging plant assets
Micron Precision, Inc. purchased a computer for $2,500, debiting Computer Equipment. During 2016 and 2017, Micron Precision, Inc. recorded total
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- Depreciation Methods Berkshire Corporation purchased a copying machine for $9,800 on January 1, 2019. The machine's residual value was $1,175 and its expected life was 5 years or 2,000,000 copies. Actual usage was 480,000 copies in the first year and 446,000 in the second year. Required: 1. Compute depreciation expense for 2019 and 2020 using the: a. Straight-line method. Depreciation expense: $fill in the blank 1 per year b. Double-declining-balance method. Depreciation Expense 2019 $fill in the blank 2 2020 $fill in the blank 3 c. Units-of-production method. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar.) Depreciation Expense 2019 $fill in the blank 4 2020 $fill in the blank 5 2. For each depreciation method, what is the book value of the machine at the end of 2019? At the end of 2020? If required, round your answers to the nearest whole dollar. 2019 2020 a. Straight-line method $fill in the blank 6…arrow_forwardBussell Company exchanged the following assets during 2019: Feb. 1 Acquired a newer machine by paying $4,000 cash and giving up a machine that originally cost $40,000, has a book value of $25,000, and is worth $30,000. Feb. 1 Same facts as above (newer machine worth $30,000), except that the asset being surrendered has a book value of $33,000. Apr. 1 Acquired a newer machine by giving up a machine that originally cost $45,000, has a book value of $20,000, and is worth $32,000. In addition, $5,000 cash was received. Apr. 1 Same facts as above (machine with an original cost of $45,000), except that the asset being surrendered has a book value of $36,000. Jul. 1 Acquired a newer machine worth $90,000 by giving up a machine of equal value. The machine surrendered had originally cost $150,000 and has a book value of $80,000. Jul. 1 Same facts as above (new machine worth $90,000), except that the asset being surrendered has a book value of $94,000. Oct. 1 Acquired a building…arrow_forwardZorzi Corporation purchased a Machine on January 1, 2017 for $80.000. The machinery is estimated to have a salvage value of $8,000 after a useful life of 8 years. Compute the depreciation expense for 2017 using the sume of the double-decling balance method O $5.000 O $10,000 O $15.000 O S20.000arrow_forward
- Zorzi Corporation purchased a Machine on January 1, 2017 for $80,000. The machinery is estimated to have a salvage value of $8,000 after a useful life of 8 years. Compute the depreciation expense for 2017 using the Double Deding Balance Method assuming the machinery was purchased on October 1, 2017 O S2.500 O $5.000 O S7.500 O S10.000arrow_forward1. Denver, Inc., exchanged land and cash of $8,000 for equipment. The land was purchased at $55,000 a few years ago and a fair value of $60,000. Prepare the journal entry to record the exchange. Assume the exchange has no commercial substance. 2. Metro Inc. trades its used machine for a new model at Denver Inc. The used machine has a book value of $8,000 (original cost of $12,000) and a fair value of $4,000. The new model lists for $15,000. Denver gives Metro a trade-in allowance of $7,000 for the used machine, $3,000 more than its fair value. Prepare a journal entry for Metro, assuming commercial substance.arrow_forwardMarin Inc. purchased a commercial grade soft-serve ice cream machine on September 30, 2017. Marin traded in its existing machine and paid cash in the transaction. The details of the transaction are as follows: ● List price of new freezer $25,730 ● Cash paid 17,112 ● Cost of old machine (4-year life, $1,860 salvage value) 21,700 ● Accumulated depreciation—old machine (straight-line) 9,920 ● Secondhand fair value of old machine 8,308 Prepare the journal entries necessary to record this exchange, assuming that the exchange (a) has commercial substance, and (b) lacks commercial substance.arrow_forward
- Acquisition of Equipment - A machine cost $1,200,000, has annual depreciation of $200,000, and has accumulated depreciation of $850,000 on December 31, 2017. On April 1, 2018, when the machine has a fair value of $275,000, it is exchanged for a machine with a fair value of $1,350,000 and the proper amount of cash is paid. The exchange had commercial substance. Required: Prepare the entry to record the acquisition of the new equipment.arrow_forwardComputing and Assessing Plant Asset ImpairmentZeibart Company purchased equipment for $225,000 on July 1, 2012, with an estimated useful life of 10 tears and expected salvage of $25,000. Straight line depreciation is used. On July 1, 2016, economic factors cause the fair value market to decline to $90,000. On this date, Zeibart examined for impairment and estimates $125,000 in future cash inflow related to use of this equipment.a. Is the equipment impaired at 7/1/2016? Explainb. If the equipment is impaired on 7/1/2016, compute the impairment loss and prepare a journal entry to record loss. c. What amount of depreciation expense would Zeibart record the 12 months from 7/1/2016 through 6/30/2017? Prepare a journal entry to record the depreciation expense. (no change in salvage)d. Using the financial statement effect template , show how the entries in part b & c affect Zeibart Company’s balance sheet and income statement.arrow_forwardMetlock Inc. purchased a commercial grade soft-serve ice cream machine on September 30, 2017. Metlock traded in its existing machine and paid cash in the transaction. The details of the transaction are as follows: ● List price of new freezer $16,600 ● Cash paid 11,040 ● Cost of old machine (4-year life, $1,200 salvage value) 14,000 ● Accumulated depreciation—old machine (straight-line) 6,400 ● Secondhand fair value of old machine 5,360 Prepare the journal entries necessary to record this exchange, assuming that the exchange (a) has commercial substance, and (b) lacks commercial substance.Metlock’s fiscal year ends on December 31, and Metlock recorded depreciation on the old machine through September 30, 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit (a) Exchange has commercial substance: enter an account title To…arrow_forward
- Hahaaarrow_forwardBramble Company purchased an electric wax melter on April 30, 2025, by trading in its old gas model and paying the balance in cash. The following data relate to the purchase. List price of new melter Cash paid Cost of old melter (5-year life, $800 salvage value) Accumulated depreciation-old melter (straight-line) Secondhand fair value of old melter $20,200 No. Account Titles and Explanation (a) Exchange has commercial substance: 12,800 14,300 8,100 6,700 Prepare the journal entries necessary to record this exchange, assuming that the exchange (a) has commercial substance, and (b) lacks commercial substance. Bramble's fiscal year ends on December 31, and depreciation has been recorded through December 31, 2024. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Debit Creditarrow_forwardcan you please help with the highlighted questionarrow_forward
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