asset exchange

Springtime Company manufactures outdoor storage sheds. One production machine that has been used over the past few years needs replacement as it highly inefficient to operate and requires frequent repairs. The machine was initially purchased on January 1,2020 for $225,000. At that time, it was estimated to be sold for $80,000 at the end of its useful life of 10 years. On May 31, 2023 the production manager purchased a new machine that is faster, more reliable, and uses less energy. Use of this new machine would result in a significant difference in future cash flows due to substantial cost savings associated with operating efficiencies. The list price of the new machine was $145,000. To finance the purchase, Springtime traded its old machine and received a trade-in allowance of $125,000. The remaining $20,000 was paid in cash. Required: 1. Springtime uses the Double-Declining-Balance method of depreciating capital assets. Calculate the net book value of the old machine as of December 31, 2022. [4 marks] 2. Prepare all necessary journal entries needed on May 31,2023 to account for the trade-in of the old machine for the new machine. (Hint: Recall that a "trade-in" is a type of capital disposal.) [8 marks]