Trade-in on purchase of new asset (Learning Objectives 3 & 5) 15–20 min.

Essex County Transport is a large trucking company. Essex County Transport uses the unitsof-

production (UOP) method to depreciate its trucks. In 2013, Essex County Transport acquired a Mack truck costing $400,000 with a useful life of 10 years or 937,500 miles.

Estimated residual value was $25,000. The truck was driven 76,000 miles in 2013, 126,000 miles in 2014, and 166,000 miles in 2015. After 60,000 miles in 2016, Essex County Transport traded in the Mack truck for a new Freightliner that cost $460,000.

Essex County Transport received a $245,000 trade-in allowance for the old truck and paid the difference in cash. Journalize the entry to record the purchase of the new truck.

AppendixLO1