On March 31, 2016, the Herzog Company purchased a factory complete with machinery and equipment. The allocation of the total purchase price of $1,000,000 to the various types of assets along with estimated useful lives and residual values are as follows: HERZOG COMPANY Estimated Estimated Useful Asset Cost Residual Value Life in Years Land $100,000 N/A N/A Building 500,000 none 25 Machinery 240,000 10% of cost 8 Equipment 160,000 $13,000 6 Total $1,000,000 Additional information: Machinery sold 6/29/17 $80,000 Original cost of machinery on 3/31/16 $100,000 Depreciation method for buildings and Straight Line machinery Depreciation method for equipment Sum-of-the-years' digits Partial-year depreciation based on months in service On June 29, 2017, machinery included in the March 31, 2016, purchase that cost $100,000 was sold for $80,000. Herzog uses the straight-line depreciation method for buildings and machinery and the sum-of-the-years'-digits method for equipment. Partial-year depreciation is calculated based on the number of months an asset is in service. Required: 1. Compute depreciation expense on the building, machinery, and equipment for 2016. 2. Prepare the journal entries to record (1) depreciation on the machinery sold on June 29, 2017, and (2) the sale of machinery. 3. Compute depreciation expense on the building, remaining machinery, and equipment for 2017.

	Requirement 1:
	Building:
	Cost at 3/31/16
	Estimated life
	Straight-line rate				%
	Machinery:
	Cost at 3/31/16
	Estimated life
	Residual Value
	Straight-line rate
	Equipment:
	Cost at 3/31/16
	Estimated life
	Residual Value
	Sum-of-the-years'-digits rate
	Sum-of-the-digits
	Requirement 2:
	General Journal
		Account			Debit	Credit
	1. 6/29/2017
	Machinery sold 6/29/2017:
	Cost at 3/31/16
	Estimated life
	Residual Value
	Straight-line rate
	2. 6/29/2017
	2016 Depreciation:
	Cost at 3/31/16
	Estimated life
	Residual Value
	Straight-line rate
	2017 Depreciation:
	Cost at 3/31/16
	Estimated life
	Residual Value
	Straight-line rate
	Requirement 3:
	Building:
	Cost at 3/31/17
	Estimated life
	Straight-line rate
	Machinery:
	Cost at 3/31/17
	Estimated life
	Residual Value
	Straight-line rate
	Equipment:
	Cost at 3/31/17
	Estimated life
	Residual Value
	2016 Sum-of-the-years'-digits rate
	2015 Sum-of-the-years'-digits rate
	Sum-of-the-digits