The plant asset and accumulated depreciation accounts of Pell Corporation had th
ID: 2455490 • Letter: T
Question
The plant asset and accumulated depreciation accounts of Pell Corporation had the following balances at December 31, 2012
On January 2, 2013, machinery and equipment were purchased at a total invoice cost of $300,000, which included a $6,300 charge for freight. Installation costs of $35,000 were incurred.
On March 31, 2013, a machine purchased for $66,000 in 2009 was sold for $44,500. Depreciation recorded through the date of sale totaled $25,850.
On May 1, 2013, expenditures of $58,000 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, 2013, 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 $36 per share. Pell paid legal fees and title insurance totaling $31,000. Shortly after acquisition, the building was razed at a cost of $43,000 in anticipation of new building construction in 2014.
On December 31, 2013, Pell purchased a new automobile for $16,050 cash and trade-in of an old automobile purchased for $22,000 in 2009. Depreciation on the old automobile recorded through December 31, 2013, totaled $14,300. The fair value of the old automobile was $4,550.
Prepare a schedule analyzing the changes in each of the plant assets during 2013. (show work)
Prepare a schedule showing the gain or loss from each asset disposal that would be recognized in Pell’s income statement for the year ended December 31, 2013.
Plant Asset AccumulatedDepreciation Land $ 430,000 $ — Land improvements 220,000 53,000 Building 1,900,000 358,000 Machinery and equipment 1,174,000 413,000 Automobiles 190,000 120,000 Transactions during 2013 were as follows: a.
On January 2, 2013, machinery and equipment were purchased at a total invoice cost of $300,000, which included a $6,300 charge for freight. Installation costs of $35,000 were incurred.
b.On March 31, 2013, a machine purchased for $66,000 in 2009 was sold for $44,500. Depreciation recorded through the date of sale totaled $25,850.
c.On May 1, 2013, expenditures of $58,000 were made to repave parking lots at Pell’s plant location. The work was necessitated by damage caused by severe winter weather.
d.On November 1, 2013, 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 $36 per share. Pell paid legal fees and title insurance totaling $31,000. Shortly after acquisition, the building was razed at a cost of $43,000 in anticipation of new building construction in 2014.
e.On December 31, 2013, Pell purchased a new automobile for $16,050 cash and trade-in of an old automobile purchased for $22,000 in 2009. Depreciation on the old automobile recorded through December 31, 2013, totaled $14,300. The fair value of the old automobile was $4,550.
Required: 1.Prepare a schedule analyzing the changes in each of the plant assets during 2013. (show work)
PELL CORPORATION Analysis of Changes in Plant Assets For the Year Ended December 31, 2013 Balance Balance 12/31/2012 Increase Decrease 12/31/2013 Land 430,000 Land Improvements 220,000 Building 1,900,000 Machinery and equipment 1,174,000 Automobiles 190,000 TOTALS 3,914,000Explanation / Answer
Working notes:
Machinery and equipment 1-Jan-13 Opening Balance $ 1,174,000 2-Jan-13 Add: Machine purchased Cost $ 300,000 Installation cost $ 35,000 $ 335,000 Less: Machine Sold 31-Mar-13 Cost of machine $ 66,000 $ 66,000 Less: Depreciation $ 25,850 Book Value $ 40,150 Selling price $ 44,500 Gain on sales $ 4,350 $ 1,443,000 Land Improvement 1-Jan-13 Opening Balance $ 220,000 1-May-13 Repave parking lots $ 58,000 Closing balance $ 278,000 Land 1-Jan-13 Opening balance $ 430,000 1-Nov-13 Purchases $ 360,000 Add: Legal fee $ 31,000 Less: Buildings $ 43,000 Closing balance $ 778,000 Buildings 1-Jan-13 Opening Balance $ 1,900,000 1-Nov-13 Add: Purchases $ 43,000 Closing balance $ 1,943,000 Automobiles 1-Jan-13 Opening Balance $ 190,000 Purchases Cash $ 16,050 Book value of machine $ 22,000 Less depreciation $ 14,300 Book value at time of sales $ 7,700 FV at time of sales $ 4,550 Gain on exchange $ 3,150