ACCT I S 100 Chapter Notes - Chapter 9: Intangible Asset, Earnings Management, Net Income
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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;broker’s 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.
| Plant Asset | Accumulated Depreciation | |||||
| Land | $ | 400,000 | $ | 0 | ||
| Landimprovements | 195,000 | 55,000 | ||||
| Building | 1,600,000 | 400,000 | ||||
| Machinery andequipment | 1,258,000 | 455,000 | ||||
| Automobiles | 160,000 | 117,000 | ||||
| Transactions during 2013 were asfollows: | |
| a. | On January 2, 2013, machinery and equipment were purchased at atotal invoice cost of $310,000, which included a $6,500 charge forfreight. Installation costs of $37,000 were incurred. |
| b. | On March 31, 2013, a machine purchased for $68,000 in 2009 wassold for $41,500. Depreciation recorded through the date of saletotaled $28,900. |
| c. | On May 1, 2013, expenditures of $60,000 were made to repaveparking lots at Pell's plant location. The work was necessitated bydamage caused by severe winter weather. |
| d. | On November 1, 2013, Pell acquired a tract of land with anexisting building in exchange for 10,000 shares of Pell's commonstock that had a market price of $48 per share. Pell paid legalfees and title insurance totaling $28,000. Shortly afteracquisition, the building was razed at a cost of $45,000 inanticipation of new building construction in 2014. |
| e. | On December 31, 2013, Pell purchased a new automobile for$17,750 cash and trade-in of an old automobile purchased for$23,000 in 2009. Depreciation on the old automobile recordedthrough December 31, 2013, totaled $17,250. The fair value of theold automobile was $4,250. |
| Required: |
For each asset classification, prepare a schedule showingdepreciation expense for the year ended December 31, 2013, usingthe following depreciation methods and useful lives: |
| Land improvements—Straight line;15 years. |
| Building—150% declining balance;20 years. |
| Machinery and equipment—Straightline; 10 years. |
| Automobiles—150% decliningbalance; 3 years. |
| Depreciation is computed to the nearest month and noresidual values are used. (Do not round intermediatecalculations.) I am having issues coming up with the correct amount forMachinery and equipment below. Please help. I posted this questionpreviously and got a response of "152508.3" for theMachinery and equipment and it was not correct. Thank You! Here are the numbers I came up with. Missing the Machinery andequipment cost. PELL CORPORATION Depreciation Expense For the Year Ended December 31, 2013 Total depreciation expense for 2013 = |
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Question: At December 31, 2017, Cord Company's plantasset and accumulated depreciation and amortization ac...
At December 31, 2017,Cord Company's plant asset and accumulated depreciation andamortization accounts had balances as follows:
| Category | Plant Asset | Accumulated Depreciation and Amortization | |||||
| Land | $ | 180,000 | $ | — | |||
| Buildings | 1,750,000 | 333,900 | |||||
| Machinery andequipment | 1,375,000 | 322,500 | |||||
| Automobiles andtrucks | 177,000 | 105,325 | |||||
| Leaseholdimprovements | 226,000 | 113,000 | |||||
| Landimprovements | — | — | |||||
Depreciation methods and useful lives:
Buildings—150% declining balance; 25 years.
Machinery and equipment—Straight line; 10 years.
Automobiles and trucks—150% declining balance; 5 years, allacquired after 2014.
Leasehold improvements—Straight line.
Land improvements—Straight line.
Depreciation is computed to the nearest month and residual valuesare immaterial. Transactions during 2018 and other information:
On January 6, 2018, aplant facility consisting of land and building was acquired fromKing Corp. in exchange for 30,000 shares of Cord's common stock. Onthis date, Cord's stock had a fair value of $40 a share. Currentassessed values of land and building for property tax purposes are$160,000 and $640,000, respectively.
On March 25, 2018, newparking lots, streets, and sidewalks at the acquired plant facilitywere completed at a total cost of $222,000. These expenditures hadan estimated useful life of 12 years.
The leaseholdimprovements were completed on December 31, 2014, and had anestimated useful life of eight years. The related lease, whichwould terminate on December 31, 2020, was renewable for anadditional four-year term. On April 30, 2018, Cord exercised therenewal option.
On July 1, 2018,machinery and equipment were purchased at a total invoice cost of$330,000. Additional costs of $12,000 for delivery and $55,000 forinstallation were incurred.
On August 30, 2018,Cord purchased a new automobile for $13,000.
On September 30, 2018,a truck with a cost of $24,500 and a book value of $10,000 on dateof sale was sold for $12,000. Depreciation for the nine monthsended September 30, 2018, was $2,250.
On December 20, 2018,a machine with a cost of $19,500 and a book value of $3,100 at dateof disposition was scrapped without cash recovery.
Required:
1.Prepare a schedule analyzing the changes in each of the plant assetaccounts during 2018. Do not analyze changes in accumulateddepreciation and amortization.
2. For each asset category, prepare a scheduleshowing depreciation or amortization expense for the year endedDecember 31, 2018.
I need help with thesecond requirement.
