Chapter 10, Problem E10.29AE

To determine

Cost of asset:

The cost of assets includes the costs incurred on purchase of the asset and also the costs incurred in putting the asset in use.

Depreciation:

A reduction in value of assets over the years due to wear and tear is called deprecation.

Units of Production method:

Under this method of depreciation, the depreciation is based on the number units of production. The total value of asset is divided by the total number of units it could produce to find the depreciation per unit. Then the depreciation per unit is multiplied with number of units produced during a particular period to determine the depreciation expense during that period.

To determine:

1. Journalize the depreciation expense in 2018.

2. Compute the Wimot’s cost of the new truck.

3. Journalize the exchange of assets on March 15, 2018 assuming the exchange had commercial substance.