1) Revson Corporation purchased land adjacent to its plant toimprove access for trucks making deliveries. Expenditures incurredin purchasing the land were as follows: purchase price, $55,000;brokerâs fees, $6,000; title search and other fees, $5,000;demolition of an old building on the property, $5,700; grading,$1,200; digging foundation for the road, $3,000; laying and pavingdriveway, $25,000; lighting $7,500; signs, $1,500. List the itemsand amounts that should be included in the Land account.
2) Mike Geary, the controller of Shellhammer Company, hasreviewed the expected useful lives and salvage values of selecteddepreciable assets at the beginning of 2017. Here are hisfindings:
Type of Asset
Date Acquired
Cost
Accumulated Depreciation, Jan. 1, 2017
Useful Life
(in Years)
Salvage Value
Old
Proposed
Old
Proposed
Building
Jan. 1, 2009
$2,700,000
$516,000
40
50
$120,000
$84,000
Warehouse
Jan. 1, 2012
240,000
46,000
25
20
10,000
8,000
All assets are depreciated by the straight-line method.Shellhammer Company uses a calendar year in preparing annualfinancial statements. After discussion, management has agreed toaccept Mike's proposed changes. (The "Proposed" useful life istotal life, not remaining life.)
Instructions
(a) Compute the revised annualdepreciation on each asset in 2017. (Show computations.)
(b) Prepare the entry (or entries) torecord depreciation on the building in 2017.
1) Revson Corporation purchased land adjacent to its plant toimprove access for trucks making deliveries. Expenditures incurredin purchasing the land were as follows: purchase price, $55,000;brokerâs fees, $6,000; title search and other fees, $5,000;demolition of an old building on the property, $5,700; grading,$1,200; digging foundation for the road, $3,000; laying and pavingdriveway, $25,000; lighting $7,500; signs, $1,500. List the itemsand amounts that should be included in the Land account.
2) Mike Geary, the controller of Shellhammer Company, hasreviewed the expected useful lives and salvage values of selecteddepreciable assets at the beginning of 2017. Here are hisfindings:
Type of Asset | Date Acquired | Cost | Accumulated Depreciation, Jan. 1, 2017 | Useful Life (in Years) | Salvage Value | |||
Old | Proposed | Old | Proposed | |||||
Building | Jan. 1, 2009 | $2,700,000 | $516,000 | 40 | 50 | $120,000 | $84,000 | |
Warehouse | Jan. 1, 2012 | 240,000 | 46,000 | 25 | 20 | 10,000 | 8,000 | |
All assets are depreciated by the straight-line method.Shellhammer Company uses a calendar year in preparing annualfinancial statements. After discussion, management has agreed toaccept Mike's proposed changes. (The "Proposed" useful life istotal life, not remaining life.)
Instructions
(a) Compute the revised annualdepreciation on each asset in 2017. (Show computations.)
(b) Prepare the entry (or entries) torecord depreciation on the building in 2017.
