29. Long-lived assets (30 points) 5
Dep for 182
impact for sale of Asset
On January 1, 2018, Drye Company purchased a $445,000 piece of machinery to use in its business.
The machinery was shipped FOB Delivery point, $3,000, and required special installation by the
vendor prior to use, $1,500. Drye Company purchased the machinery by issuing a five-year note.
The machinery has an estimated useful life of 10 years and expected to have a $15,000 salvage value
at the end of its useful life. Drye uses the straight-line method of depreciating long-lived assets.
Due to changes in technology, Drye sold the machinery on December 31, 2021 for $265,000 cash.
They plan on purchasing newer machinery using the proceeds from the sale.
What is the capitalized cost of the machinery purchased on 1/1/2018? (2 points) -2
Complete the following chart (1 point ea):
-16
445000-810OO
Date Historical Cost Depreciation Accumulated Net Book
Expense Depreciation Value
12/31/2018
15000
12/31/2019
12/31/2020
12/31/2021
356,000
284,800 $10 - 0.12 = 0.2$
227,840 10
182,272 56960
Record the following transactions related to the asset purchase (3 points ea):
-1 (1) Purchase of machinery on 1/1/2018
-3 (2) Depreciation of machinery on BOTH 12/31/2018 & 12/31/2019
-3 (3) Sale of asset on 12/31/2021
45,568
Assets Liabilities Equity Income Statement
Accumulated
Retained Common
Revenue Expense Net
Income
# Cash Machinery Depreciation Notes Pay Earnings Stock
(44)5000) 445000