ACCT 2001 Chapter 10: Chapter 10 acctg
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At December 31, 2015, Cord Company's plant asset and accumulateddepreciation and amortization accounts had balances as follows: |
| Category | Plant Asset | Accumulated Depreciation and Amortization | ||||
| Land | $ | 178,000 | $ | â | ||
| Buildings | 1,650,000 | 331,900 | ||||
| Machinery andequipment | 1,275,000 | 320,500 | ||||
| Automobiles andtrucks | 175,000 | 103,325 | ||||
| Leaseholdimprovements | 222,000 | 111,000 | ||||
| Landimprovements | â | â | ||||
| Depreciation methods and usefullives: |
| Buildingsâ150% decliningbalance; 25 years. |
| Machinery and equipmentâStraightline; 10 years. |
| Automobiles and trucksâ150%declining balance; 5 years, all acquired after 2012. |
| Leasehold improvementsâStraightline. |
| Land improvementsâStraightline. |
Depreciation is computed to thenearest month and residual values are immaterial. Transactionsduring 2016 and other information: |
| a. | On January 6, 2016, a plant facility consisting of land andbuilding was acquired from King Corp. in exchange for 28,000 sharesof Cord's common stock. On this date, Cord's stock had a fair valueof $50 a share. Current assessed values of land and building forproperty tax purposes are $195,000 and $585,000, respectively. |
| b. | On March 25, 2016, new parking lots, streets, and sidewalks atthe acquired plant facility were completed at a total cost of$210,000. These expenditures had an estimated useful life of 12years. |
| c. | The leasehold improvements were completed on December 31, 2012,and had an estimated useful life of eight years. The related lease,which would terminate on December 31, 2018, was renewable for anadditional four-year term. On April 29, 2016, Cord exercised therenewal option. |
| d. | On July 1, 2016, machinery and equipment were purchased at atotal invoice cost of $328,000. Additional costs of $10,000 fordelivery and $53,000 for installation were incurred. |
| e. | On August 30, 2016,Cord purchased a new automobile for $12,800. |
| f. | On September 30, 2016, a truck with a cost of $24,300 and a bookvalue of $9,600 on date of sale was sold for $11,800. Depreciationfor the nine months ended September 30, 2016, was $2,160. |
| g. | On December 20, 2016, a machine with a cost of $18,500 and abook value of $3,050 at date of disposition was scrapped withoutcash recovery. |
| Required: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1. | Prepare a schedule analyzing the changes in each of the plantasset accounts during 2016. Do not analyze changes in accumulateddepreciation and amortization. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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 | $ | â | |||
| 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 | â | â | |||||
Depreciation methods and useful lives:
Buildingsâ150% declining balance; 25 years.
Machinery and equipmentâStraight line; 10 years.
Automobiles and trucksâ150% declining balance; 5 years, allacquired after 2014.
Leasehold improvementsâStraight line.
Land improvementsâStraight line.
Depreciation is computed to the nearest month and residual valuesare immaterial. Transactions during 2018 and otherinformation:
On January 6, 2018, a plant facility consisting of land andbuilding was acquired from King Corp. in exchange for 30,000 sharesof Cord's common stock. On this date, Cord's stock had a fair valueof $40 a share. Current assessed values of land and building forproperty tax purposes are $160,000 and $640,000, respectively.
On March 25, 2018, new parking lots, streets, and sidewalks atthe acquired plant facility were completed at a total cost of$222,000. These expenditures had an estimated useful life of 12years.
The leasehold improvements were completed on December 31, 2014,and had an estimated useful life of eight years. The related lease,which would 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 atotal invoice cost of $330,000. Additional costs of $12,000 fordelivery and $55,000 for installation 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 bookvalue of $10,000 on date of sale was sold for $12,000. Depreciationfor the nine months ended September 30, 2018, was $2,250.
On December 20, 2018, a machine with a cost of $19,500 and abook value of $3,100 at date of disposition was scrapped withoutcash 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.
