At December 31, 2017, Grand Company reported the following asplant assets.
Land 4,000,000
Building 28,500,000
Less: Accumulated depreciation âbuildings 12,100,000 16,400,000
Equipment 48,000,000
Less: Accumulated depreciation âequipment 5,000,000 43,000,000
Total plantassets 63,400,000
During 2018, the following selected cash transactionsoccurred.
April 1 Purchased land for $2,130,000
May 1 Sold equipment that cost $75,000 whenpurchased on January 1, 2014. The equipment was sold for $450,000.
June 1 Sold land purchased on June 1, 2008 for$1,500,000. The land cost $400,000.
July 1 Purchased equipment for$2,500,000.
Dec. 31 Retired equipment that cost $500,000 when purchased onDecember 31, 2008. The company received no proceeds related tosalvage.
Instructions:
Journalize the above transactions. The company usesstraight-line depreciation for buildings and equipment. Thebuildings are estimated to have a 50-year life and no salvagevalue. The equipment is estimated to have a 10-year life and nosalvage value. Update depreciation on assets disposed of at thetime of sale or retirement.
Record adjusting entries for depreciation for 2018.
Prepare the plant assets section of Grandâs balance sheet atDecember 31, 2018.
At December 31, 2017, Grand Company reported the following asplant assets.
Land 4,000,000
Building 28,500,000
Less: Accumulated depreciation âbuildings 12,100,000 16,400,000
Equipment 48,000,000
Less: Accumulated depreciation âequipment 5,000,000 43,000,000
Total plantassets 63,400,000
During 2018, the following selected cash transactionsoccurred.
April 1 Purchased land for $2,130,000
May 1 Sold equipment that cost $75,000 whenpurchased on January 1, 2014. The equipment was sold for $450,000.
June 1 Sold land purchased on June 1, 2008 for$1,500,000. The land cost $400,000.
July 1 Purchased equipment for$2,500,000.
Dec. 31 Retired equipment that cost $500,000 when purchased onDecember 31, 2008. The company received no proceeds related tosalvage.
Instructions:
Journalize the above transactions. The company usesstraight-line depreciation for buildings and equipment. Thebuildings are estimated to have a 50-year life and no salvagevalue. The equipment is estimated to have a 10-year life and nosalvage value. Update depreciation on assets disposed of at thetime of sale or retirement.
Record adjusting entries for depreciation for 2018.
Prepare the plant assets section of Grandâs balance sheet atDecember 31, 2018.
Related questions
Problem 9-2A (Part Level Submission)
At December 31, 2014, Navaro Corporation reported the followingplant assets.
| Land | $ 5,196,000 | |||
| Buildings | $30,050,000 | |||
| Less: Accumulated depreciationâbuildings | 20,654,100 | 9,395,900 | ||
| Equipment | 69,280,000 | |||
| Less: Accumulated depreciationâequipment | 8,660,000 | 60,620,000 | ||
| Total plant assets | $75,211,900 |
During 2015, the following selected cash transactions occurred.
| Apr. | 1 | Purchased land for $3,810,400. | |
| May | 1 | Sold equipment that cost $1,039,200 when purchased on January1, 2008. The equipment was sold for $294,440. | |
| June | 1 | Sold land for $2,771,200. The land cost $1,732,000. | |
| July | 1 | Purchased equipment for $1,905,200. | |
| Dec. | 31 | Retired equipment that cost $1,212,400 when purchased onDecember 31, 2005. No salvage value wasreceived. |
Prepare the plant assets section of Navaroâs balance sheet atDecember 31, 2015. (Hint: You may wish to set up Taccounts, post beginning balances, and then post 2015transactions.) (List Plant Assets in order of Land,Building and Equipment.)
China Express purchased land for $140,000. Prior to construction on the new building, the land had to be cleared of trees and brush. Construction costs incurred during the first year are listed below:
| Land clearing costs | $ 5,000 |
| Architect fees (for new building) | 30,000 |
| Legal fees for title investigation of land | 1,000 |
| Property taxes on land (for the first year) | 2,500 |
| Building construction costs | 440,000 |
Required:
Determine the amounts that should be recorded in the land and the new building accounts.
2. Diamond Autobody purchased some new equipment. The new equipment cost $90,000. The company estimates the equipment will have a residual value of $10,000. Cheetah Copy also estimates it will use the equipment for four years or about 5,000 total hours.
Required:
Prepare a depreciation schedule for three years using the following methods:
1. Straight-line.
2. Double-declining-balance.
3. Activity-based. Actual use per year was as follows:
| Year | Hours Used |
| 1 | 1,200 |
| 2 | 1,400 |
| 3 | 1,500 |
| 4 | 1,100 |
3. The Snack Stop had the following long-term asset balances as of January 1, 2015:
| Cost | Accumulated Depreciation | Book Value | ||||
| Land | $90,000 | â | $90,000 | |||
| Building | 600,000 | ($60,000) | 540,000 | |||
| Equipment | 200,000 | (72,000) | 128,000 |
All of the assets were purchased at the beginning of 2013. The building is depreciated over a 20-year service life using the straight-line method and estimating no residual value. The equipment is depreciated over a 10-year useful life using the double-declining-balance method with an estimated residual value of $10,000. Depreciation has already been calculated for the first two years.
Required:
1. For the year ended December 31, 2015, record depreciation expense for buildings and equipment. Land is not depreciated.
2. Calculate the book value for each of the four long-term assets at December 31, 2015.
