Problem 9-3A (Part Level Submission)

On January 1, 2017, Evers Company purchased the following two machines for use in its production process.

Machine A:		The cash price of this machine was $52,000. Related expenditures included: sales tax $1,900, shipping costs $200, insurance during shipping $60, installation and testing costs $90, and $200 of oil and lubricants to be used with the machinery during its first year of operations. Evers estimates that the useful life of the machine is 5 years with a $5,200 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used.
Machine B:		The recorded cost of this machine was $180,000. Evers estimates that the useful life of the machine is 4 years with a $9,900 salvage value remaining at the end of that time period.

Prepare the following for Machine A

1.		The journal entry to record its purchase on January 1, 2017.
2.		The journal entry to record annual depreciation at December 31, 2017.

No.	Account Titles and Explanation	Debit	Credit
1.
2.

Calculate the amount of depreciation expense that Evers should record for Machine B each year of its useful life under the following assumptions.

(1)		Evers uses the straight-line method of depreciation.
(2)		Evers uses the declining-balance method. The rate used is twice the straight-line rate.
(3)		Evers uses the units-of-activity method and estimates that the useful life of the machine is 129,750 units. Actual usage is as follows: 2017, 49,000 units; 2018, 37,000 units; 2019, 25,000 units; 2020, 18,750 units.

		Depreciation Expense
		2017		2018		2019		2020
Straight-line method		$		$		$		$
Declining-balance method		$		$		$		$
Units-of-activity method		$		$		$		$

Exercise 9-15 (Part Level Submission)

Presented below are two independent transactions. Both transactions have commercial substance.

1.		Mercy Co. exchanged old trucks (cost $63,500 less $22,500 accumulated depreciation) plus cash of $16,500 for new trucks. The old trucks had a fair value of $37,900.
2.		Pence Inc. trades its used machine (cost $12,180 less $4,060 accumulated depreciation) for a new machine. In addition to exchanging the old machine (which had a fair value of $11,320), Pence also paid cash of $3,200.

(a)

	Your answer is correct.

Prepare the entry to record the exchange of assets by Mercy Co. (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 0 for the amounts.)

Account Titles and Explanation	Debit	Credit

automatically indented when amount is entered. Do not indent manually. If no entry is

Account Titles and Explanation	Debit	Credit