Question
Fred Meyer wishes to exchange a unique piece of machinery used in its operations. Fred Meyer has received three offers from other companies in the
Fred Meyer wishes to exchange a unique piece of machinery used in its operations. Fred Meyer has received three offers from other companies in the industry, each of which lacks commercial substance: Oryx Energy offered to exchange a Franklin desalination water system, and pay $20,900. Sara Lee offered to exchange a Komatsu 120-ton truck, and pay $62,600. Dyna-Flex offered to exchange a Massey-Ferguson front-loader, and pay $19,800. Information concerning each of the assets to be exchanged is noted below: Cost Accum Depn Fair Value Fred Meyer--unique piece of machinery 330,000 265,000 181,200 Oryx Energy--Franklin desalination water system 265,000 182,300 160,300 Sara Lee--Komatsu 120-ton truck 330,000 265,000 118,600 Dyna-Flex--Massey-Ferguson front-loader 150,000 65,000 161,400 Based on the three offers above and assuming Fred Meyer uses the straight-line method of depreciation with a salvage value of $1,100 an estimated useful life of 11 years, what is the annual depreciation expense of the exchanged asset that produces the least amount of depreciation expense for Fred Meyer in future years? answer is 5128. I don't know where to start with this one
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