The plant asset and accumulated depreciation accounts of Pell Corporation had th
ID: 2436455 • Letter: T
Question
The plant asset and accumulated depreciation accounts of Pell Corporation had the following balances at December 31, 2017:
Transactions during 2018 were as follows:
On January 2, 2018, machinery and equipment were purchased at a total invoice cost of $295,000, which included a $6,200 charge for freight. Installation costs of $34,000 were incurred.
On March 31, 2018, a small storage building was donated to the company. The person donating the building originally purchased it three years ago for $32,000. The fair value of the building on the day of the donation was $20,400.
On May 1, 2018, expenditures of $57,000 were made to repave parking lots at Pell's plant location. The work was necessitated by damage caused by severe winter weather.
On November 1, 2018, Pell acquired a tract of land with an existing building in exchange for 10,000 shares of Pell’s common stock that had a market price of $45 per share. Pell paid legal fees and title insurance totaling $26,500. Shortly after acquisition, the building was razed at a cost of $42,000 in anticipation of new building construction in 2019.
On December 31, 2018, Pell purchased a small storage building by giving $17,000 cash and an old automobile purchased for $21,500 on January 1, 2017. Depreciation on the old automobile recorded through December 31, 2018, totaled $16,125. The fair value of the old automobile was $4,100.
Required:
For each asset classification, prepare a schedule showing depreciation for the year ended December 31, 2018, using the following depreciation methods and useful lives:
Land improvements—Straight line; 15 years.
Building—150% declining balance; 20 years.
Machinery and equipment—Straight line; 10 years.
Automobiles—150% declining balance; 3 years.
Depreciation is computed to the nearest month and no residual values are used. (Do not round intermediate calculations and round your final answers to 2 decimal places.)
I need building and machine and equipment depreciation.
Plant Asset AccumulatedDepreciation Land $ 385,000 $ 0 Land improvements 190,500 52,000 Building 1,570,000 385,000 Machinery and equipment 1,228,000 440,000 Automobiles 157,000 115,500
Explanation / Answer
working Plant Asset Balances Increase Decrease Balance on 12/31/18 Land $385,000 d 518500 $903,500 (450000+26500+42000) Land improvements 190500 $190,500 Buildings 1570000 b 20,400 $1,590,400 Machinery and equipment 1228000 a 329,000 $1,557,000 Automobiles and trucks 157000 e 21,100 21500 $156,600 (17000+4100) Total $3,530,500 $889,000 $21,500 $4,398,000 answer Depreciation Land improvements $12,700 (190500/15) Buildings 90023 Machinery and equipment 155700 Automobiles and trucks 20750 Total depreciation $279,173 working: calculation of depreciation Buildings Rate of dep=1/20*150% 7.5 ((1570000-385000)*7.5%)+(20400*7.5%*9/12) 90023 Machinery and equipment (1228000/10)+(329000/10) 155700 Automobiles and trucks Rate of dep=1/3*150% 50 % (157000-115500)*50% 20750 For item c it’s a repair expenses of $57000 If any doubt please comment