Chapter 3
Long-Term Assets
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b) On November 1, 2016, Bob's Juice Factory traded the old bottle-sealing machine for a new
machine. The price tag on the new machine is $130,000. In return for the old machine that
Bob's Juice Factory is giving up, the supplier of the new machine agrees to take $30,000
off the price of the new machine even though the fair value of the old machine on the day
of the trade is only $20,000. Record the journal entry for the machine exchange.
Date
Account Title and Explanation
Debit
Credit
Analysis
What is a drawback of using the straight-line depreciation method?
