Question
On January 1, 2010, the Felix Company purchased a machine to use in the manufacture of its product. The invoice cost of the machine was
On January 1, 2010, the Felix Company purchased a machine to use in the manufacture of its product. The invoice cost of the machine was $260,000. At the time of acquisition, the machine had an original estimated useful life of 10 years and an estimated salvage value of $20,000. Annual depreciation was recorded at $24,000 per year. The machine was depreciated using the straight-line method.
On August 1, 2015, Felix exchanged the old machine for a newer model. The new machine had a fair market value of $200,000. The estimated fair value of the old machine was $150,000. Felix also paid $50,000 as part of the exchange transaction.
The old machine was depreciated on Felixs books up through December 31, 2014.
Required
- Bring Felixs depreciation on this machine up to date through the date of the exchange.
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