PART 3: PPE 1. Calculate cost (specially; exchanges) A. Has commercial substance B. Lack of commercial substance 2. Dep methods, revising dep method 3. Effect of dep methods on net income Question 1: ABC Company exchanged machinery with market value of $ 355,000, a recorded cost of $700,000 and Accumulated Depreciation of $300,000 with Lacey Corporation for machinery Lacey owns. The machinery has market value of $395,000, a recorded cost of $840,000, and Accumulated Depreciation of $500,000. ABC also gave MNQ $40,000 in the exchange. Assume depreciation has already been updated. Instructions (a) Prepare the entries on both companies' books assuming that the exchange has commercial substance. (Round all computations to the nearest dollar) (b) Prepare the entries on both companies' books assuming that the exchange lacks commercial substance. (Round all computations to the nearest dollar) Question 2: On June 1, 2020, Nha Trang Company purchases for $2,500,000 snow-making equipment having an estimated useful life of 6 years with an estimated salvage value of $90,000. Instructions (a) Joumalize the entries for depreciation expense for Year 2020 and 2021, assuming the company uses Sum-of-the-year depreciation. (b) Repeat part a, assuming the company uses double-declining method. (c) At the beginning of 2022, the company determined that the equipment would still be useful to the company for the next 5 years, and salvage value is estimated at $50,000. Assuming the company uses straight-line method, compute the amount of depreciation expense for 2022