**Pact Trucking Corporation: Units-of-Production Depreciation Method**Pact Trucking Corporation utilizes the units-of-production depreciation method as it effectively measures wear and tear on their trucks. Below are the specifics concerning one Mack truck in the company's fleet:### More Info- **Acquisition and Costs**: - The rig was purchased in 2021 for $370,000. - Expected service: 10 years or 1,000,000 miles. - Estimated residual value: $150,000.- **Usage**: - Miles driven: - 82,000 miles in 2021 - 122,000 miles in 2022 - 162,000 miles in 2023- **Exchange Details**: - By March 15, 2024, the truck had driven 41,000 more miles. - Traded for a less expensive Freightliner, plus an additional $26,000 paid in cash. - The fair market value of the Mack truck matched its net book value at the time of the trade.### Requirements1. **Record the Journal Entry for Depreciation Expense in 2024**.2. **Determine Pact's Cost of the New Truck**.3. **Record the Journal Entry for the Exchange of Assets on March 15, 2024**: - Assume the exchange had commercial substance.

The unit of production method of depreciation accounts for depreciation on an asset based on its…

Pact Trucking Corporation uses the units-of-production depreciation method because units-of-production best measures wear and tear on the trucks. Consider these facts about one Mack truck in the company's fleet. More info When acquired in 2021, the rig cost $370,000 and was expected to remain in service for 10 years or 1,000,000 miles. Estimated residual value was $150,000 The truck was driven 82,000 miles in 2021, 122,000 miles in 2022, and 162,000 miles in 2023. After 41,000 miles, on March 15, 2024, the company traded in the Mack truck for a less expensive Freightliner. Pact also paid cash of $26,000. Fair market value of the Mack truck was equal to its net book value on the date of the trade. Requirements 1. 2. 3. Record the journal entry for depreciation expense in 2024. Determine Pact's cost of the new truck. Record the journal entry for the exchange of assets on March 15, 2024. Assume the exchange had commercial substance. X

Pact Trucking Corporation uses the units-of-production depreciation method because units-of-production best measures wear and tear on the trucks. Consider these facts about one Mack truck in the company's fleet. More info When acquired in 2021, the rig cost $370,000 and was expected to remain in service for 10 years or 1,000,000 miles. Estimated residual value was $150,000 The truck was driven 82,000 miles in 2021, 122,000 miles in 2022, and 162,000 miles in 2023. After 41,000 miles, on March 15, 2024, the company traded in the Mack truck for a less expensive Freightliner. Pact also paid cash of $26,000. Fair market value of the Mack truck was equal to its net book value on the date of the trade. Requirements 1. 2. 3. Record the journal entry for depreciation expense in 2024. Determine Pact's cost of the new truck. Record the journal entry for the exchange of assets on March 15, 2024. Assume the exchange had commercial substance. X

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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