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Accounting 305Chapter 4 Homework1. On January 1, 2014 Behrend acquired a parcel of real estate that included land and abuilding for a negotiated price of $19,870,000. Before purchasing the property,Behrend paid $30,000 for an appraisal. Behrend also incurred closing costs of$100,000. The appraisal estimated fair value of the land at $19,800,000 and thebuilding at $2,200,000.Required:Assuming Behrend occupies the building, record the real estate acquisition using theaccounting equation format.2. On January 1, 2013, Behrend Corp. purchased a weaving machine for $1,800,000.Cost to ship the machine and set it up totaled $100,000. The machine is expected tohave a useful life of 5 years and a $400,000 salvage value. The machine is expectedto produce 1,500,000 units over its lifetime. During 2013, 320,000 units wereproduced. During 2014, 400,000 units were produced.Required:Calculate what depreciation expense would be for years 2013 and 2014 under each ofthe following depreciation methods:a.Straight-lineb.Double Declining Balancec.Units of Outputd.Sum of the yearâs digits3. Refer to the previous exercise part a) where Behrend applies straight-line depreciation.Assume that in 2015 Behrend revised its estimate of the weaving machineâs totalservice life from 5 years to 4 years and also revised its estimate of residual value from$400,000 to only $300,000.Required:Determine the amount of depreciation recognized in each year 2015 and 2016 giventhe changes in estimate.4. Refer again to the weaving machine depreciated by Behrend under the straight-linemethod. Assume that Behrend exchanges the machine on 1/1/2015 for a newmachine. The new machine has a fair value of $2,000,000 and in addition to its oldmachine Behrend pays $500,000 in cash.Required:Assuming that the exchange has âcommercial substanceâ record the exchange usingthe accounting equation format applying âfair value treatment.â