80.2K

Verified Solution

Link Copied!

Notice in both it is double decline method, thank you

d. Vargo's property plant and equipment consists of a building with a cost of $800,000 and a salvage value of $60,000 with a 15 year life purchased on 6/1/13 and a piece of equipment that cost $88,000 and a salvage value of $4,000 with a 5 year life purchased on 9/1/15. Vargo incurred delivery and installation charges of $8,000 on the equipment. Vargo spent $39,000 painting the building during 2017. On 1/1/17, Vargo revised the estimate on the life of the building. Vargo now estimates that the building will be in service until 12/31/30 On 10/1/17, Vargo exchanged the piece of equipment for a similar piece of equipment with the Eakin Company. The transaction had no commercial substance. The fair value of the equipment they gave up was $39,000. The fair value of the equipment received from Eakin was $34,000. In addition to the equipment, they received $5,000 in cash. Prepare the journal entry to record the transaction on Vargo's books. Vargo considers depreciation to be an administrative expense. Compute depreciation expense for the building and equipment for 2017. Vargo computes depreciation to the nearest month and uses the 200% (double) declining balance method for both the building and equipment

Answer & Explanation Solved by verified expert

See Answer