E9-3 Determining Financial Statement Effects of an Asset Acquisition and Straight-Line Depreciation [LO9-2, LO9-3] Conover Corp. ordered a machine on January 1 at a purchase price of $30,490. On delivery, January 2, the company paid $8,100 on the machine and signed a note payable for the balance. On January 3, it paid $260 for freight on the machine. On January 5, Conover paid installation costs relating to the machine amounting to $1,550. On December 31 (the end of the accounting period), Conover recorded depreciation on the machine using the straight-line method with an estimated useful life of ten years and an estimated residual value of $2,800. Required: 1. Indicate the effects (accounts, amounts) of each transaction (on January 1, 2, 3, and 5) on the accounting equation. Use the following schedule: (Enter any decreases to accounts with a minus sign.) Date Assets = Liabilities + Stockholders Jan. 1 Jan. 2 Cash 8,100 Accounts payable Jan. 3 Jan. 5 2. Compute the acquisition cost of the machine. Acquisition cost 3. Compute the depreciation expense to be reported for the first year. Depreciation 4. What should be the book value of the machine at the end of the second year? Book value