Part 1: Non-Monetary Exchange On January 1, 2020, the Felix Company purchased a machine to...
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Part 1: Non-Monetary Exchange On January 1, 2020, the Felix Company purchased a machine to use in the manufacture of its product The invoice cost of the machine was $260,000; at the time of acquisition, the machine had an original estimated useful life of 10 years and an estimated salvage value of $20,000. The machine was depreciated using the straight-line method On August 1, 2025, Felix exchanged the old machine for a newer model. The new machine had a fair market value of $157,250. The estimated fair value of the old machine was $185,000. In the exchange transaction, Felix received the new machine plus $27,750 in cash The old machine was depreciated on Felix's books up through December 31, 2024 Required a. Bring Felix's depreciation on this machine up to date through the date of the exchange b. Prepare the journal entry on August 1, 2025 to record the exchange assuming that the exchange transaction had commercial substance
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