Page1 / 1

28 - E11-8 (Depreciation ComputationReplacement,...

This preview shows document page 1. Sign up to view the full document.

View Full Document Right Arrow Icon

28 - E11-8 (Depreciation ComputationReplacement,...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
E11-8 (Depreciation Computation—Replacement, Nonmonetary Exchange) Goldman Corporation bought a machine on June 1, 2010, for $31,800, f.o.b. the place of manufacture. Freight to the point where it was set up was $200, and $500 was expended to install it. The machine’s useful life was estimated at 10 years, with a salvage value of $2,500. On June 1, 2011, an essential part of the machine is replaced, at a cost of $2,700, with one designed to reduce the cost of operating the machine. The cost of the old part and related depreciation cannot be determined with any accuracy. On June 1, 2014, the company buys a new machine of greater capacity for $35,000, delivered, trading in the old machine which has a fair value and trade-in allowance of $20,000. To prepare the old machine for removal from the plant cost $75, and expenditures to install the new one were $1,500. It is estimated that the new machine has a useful life of 10 years, with a salvage value of $4,000 at the end of that time. The exchange has commercial substance.
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.
Ask a homework question - tutors are online