Homework 7 1. Red River Ine purchased a machine on January 1, 2020 for $75,000. The estimated useful life of the machine is 5 years, the salvage value is $10,000, and the company uses the double-declining balance method to depreciate fixed assets. 1. How much depreciation should Red River record each year of the asset's life? b. What journal entry should the company record if at the end of the fifth year, the machine and S19.000 are exchanged for a car valued at $25,000? 2. On January 1, 2018, Swift Corp purchased a truck for $88,000. The manager estimated that the truck would be driven 300,000 miles during the next 6 years, at which time it would have a salvage value of 57,000. At the end of the first two years, the odometer read 88,000. If the company uses the activity method of depreciation, what is the book value of the truck on December 31, 2019? 3. Mango Republic Corporation purchased equipment at the beginning of 2018 at a cost of S60,000. The equipment had an estimated life of 5 years and an estimated residual value of 55,000. On January 1, 2020, the company made major improvements of $3,000 to the equipment that extended its lifc two more years. (Starting with 2020, the equipment has a remaining life of 5 years. The salvage value remained the same. The company uses the straight-line depreciation method. a. Compute the book value of the equipment as of the end of 2019. b. How much is depreciation expense for 2020? c. After recording depreciation for 2020. Mango sells the equipment for S20,000 cash. What journal entry should Mango record? 4. The balance in accumulated depreciation on January 1 and December 31 is $60,000 and $70,000, respectively, during a year in which an asset with a cost of $20,000 and net book value of $5,000 was sold for $3,000. Calculate the amount of depreciation expense for the current year