Wimot Trucking Corporation uses the units-of-production depreciation method because units-of-production best measures wear and tear on the trucks. Consider these facts about one Mack truck in the company's fleet.
When acquired in 2015, the rig cost $360,000 and was expected to remain in service for 10 years or 1,000,000 miles. Estimated residual value was $90,000. The truck was driven 80,000 miles in 2015, 120,000 miles in 2016, and 160,000 miles in 2017. After 44,000 miles, on March 15, 2018, the company traded in the Mack truck for a less expensive Freightliner. Wimot also paid cash of $20,000. Fair market value of the Mack truck was equal to its net book value on the date of the trade.
Requirements
1. Record the journal entry for depreciation expense in 2018.
2. Determine Wimot's cost of the new truck.
3. Record the journal entry for the exchange of assets on March 15, 2018. Assume the exchange had commercial substance.