On March 31, 2016, the Herzog Company purchased a factorycomplete with machinery and equipment. The allocation of the totalpurchase price of $920,000 to the various types of assets alongwith estimated useful lives and residual values are as follows:

Asset Cost Estimated Residual Value Estimated Useful
Life in Years

Land $ 140,000 N/A N/A

Building 420,000 none 25

Machinery 220,000 10% of cost 6

Equipment 140,000 $ 14,000 6

Total $ 920,000

On June 29, 2017, machineryincluded in the March 31, 2016, purchase that cost $92,000 was soldfor $72,000. Herzog uses the straight-line depreciation method forbuildings and machinery and the sum-of-the-years'-digits method forequipment. Partial-year depreciation is calculated based on thenumber of months an asset is in service.

Required:

1.
Compute depreciation expense on the building, machinery, andequipment for 2016. (Do not round intermediatecalculations.)

2.
Prepare the journal entries to record the depreciation on themachinery sold on June 29, 2017, and the sale of machinery.(Do not round intermediate calculations. If no entry isrequired for a transaction/event, select "No journal entryrequired" in the first account field.)

3.
Compute depreciation expense on the building, remainingmachinery, and equipment for 2017. (Do not roundintermediate calculations.)

Question

On March 31, 2016, the Herzog Company purchased a factorycomplete with machinery and equipment. The allocation of the totalpurchase price of $920,000 to the various types of assets alongwith estimated useful lives and residual values are as follows:

Asset	Cost		Estimated Residual Value		Estimated Useful Life in Years
Land	$	140,000	N/A		N/A
Building		420,000	none		25
Machinery		220,000	10% of cost		6
Equipment		140,000	$	14,000	6

Total	$	920,000

On June 29, 2017, machineryincluded in the March 31, 2016, purchase that cost $92,000 was soldfor $72,000. Herzog uses the straight-line depreciation method forbuildings and machinery and the sum-of-the-years'-digits method forequipment. Partial-year depreciation is calculated based on thenumber of months an asset is in service.

Required:
1.	Compute depreciation expense on the building, machinery, andequipment for 2016. (Do not round intermediatecalculations.)

2.	Prepare the journal entries to record the depreciation on themachinery sold on June 29, 2017, and the sale of machinery.(Do not round intermediate calculations. If no entry isrequired for a transaction/event, select "No journal entryrequired" in the first account field.)

3.	Compute depreciation expense on the building, remainingmachinery, and equipment for 2017. (Do not roundintermediate calculations.)

Equipment	Life (Years)	Estimated Cost	Residual Value
Turbines	25	$4,500,000	$500,000
Steam pipes	15	3,000,000	300,000
Furnace	20	6,000,000	0

Category	Plant Asset		Accumulated Depreciation and Amortization
Land	$	178,000	$	â
Buildings		1,650,000		331,900
Machinery andequipment		1,275,000		320,500
Automobiles andtrucks		175,000		103,325
Leaseholdimprovements		222,000		111,000
Landimprovements		â		â

a.	On January 6, 2016, a plant facility consisting of land andbuilding was acquired from King Corp. in exchange for 28,000 sharesof Cord's common stock. On this date, Cord's stock had a fair valueof $50 a share. Current assessed values of land and building forproperty tax purposes are $195,000 and $585,000, respectively.
b.	On March 25, 2016, new parking lots, streets, and sidewalks atthe acquired plant facility were completed at a total cost of$210,000. These expenditures had an estimated useful life of 12years.
c.	The leasehold improvements were completed on December 31, 2012,and had an estimated useful life of eight years. The related lease,which would terminate on December 31, 2018, was renewable for anadditional four-year term. On April 29, 2016, Cord exercised therenewal option.
d.	On July 1, 2016, machinery and equipment were purchased at atotal invoice cost of $328,000. Additional costs of $10,000 fordelivery and $53,000 for installation were incurred.
e.	On August 30, 2016,Cord purchased a new automobile for $12,800.
f.	On September 30, 2016, a truck with a cost of $24,300 and a bookvalue of $9,600 on date of sale was sold for $11,800. Depreciationfor the nine months ended September 30, 2016, was $2,160.
g.	On December 20, 2016, a machine with a cost of $18,500 and abook value of $3,050 at date of disposition was scrapped withoutcash recovery.

Plant Asset			Accumulated Depreciation
Land	$	400,000		$	0
Landimprovements		195,000			55,000
Building		1,600,000			400,000
Machinery andequipment		1,258,000			455,000
Automobiles		160,000			117,000

	Transactions during 2013 were asfollows:
a.	On January 2, 2013, machinery and equipment were purchased at atotal invoice cost of $310,000, which included a $6,500 charge forfreight. Installation costs of $37,000 were incurred.
b.	On March 31, 2013, a machine purchased for $68,000 in 2009 wassold for $41,500. Depreciation recorded through the date of saletotaled $28,900.
c.	On May 1, 2013, expenditures of $60,000 were made to repaveparking lots at Pell's plant location. The work was necessitated bydamage caused by severe winter weather.
d.	On November 1, 2013, Pell acquired a tract of land with anexisting building in exchange for 10,000 shares of Pell's commonstock that had a market price of $48 per share. Pell paid legalfees and title insurance totaling $28,000. Shortly afteracquisition, the building was razed at a cost of $45,000 inanticipation of new building construction in 2014.
e.	On December 31, 2013, Pell purchased a new automobile for$17,750 cash and trade-in of an old automobile purchased for$23,000 in 2009. Depreciation on the old automobile recordedthrough December 31, 2013, totaled $17,250. The fair value of theold automobile was $4,250.

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