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Vargo's property plant and equipment consist of a building with a cost of $800,000 and...

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Accounting

Vargo's property plant and equipment consist of a building with a cost of $800,000 and a salvage value of$60,000 with 15 years useful life purchased on9/1/15. Vargo incurred delivery and installation cost of $8,000 on the equipment. Vargo spent $39,000 painting the building during 2017. On 1/1/2017 Vargo revised the estimate on the life of the building. Vargo now estimates that the building will be in service until 12/31/2030.(using double decline method on depr.)

on 10/1/2017, Vargo exchanged the piece of equipment for a similar piece of equipment with Eakin company. The transaction had no commercial substance. The fair value of equipment they gave up was $39,000. The fair value received from Eakin was $34,000. In addition to the equipment, they received $5,000 in cash.

1)prepare the journal entry to record the transaction on Vargo's books?

2)Vargo considers depreciation to be an administrative expanse. Compute depreciation expense for the building and equipment for 2017. Vargo computes depreciation on the nearest month and uses the 200% (double declining balance method) for both building and equipment

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