Question

ESSAY.

Sing Corporation, a manufacturer of steel products, began operations on October 1, 2016. Sing’s accounting department has begun to prepare the capital asset and depreciation schedule that follows. You have been asked to assist in completing this schedule. In addition to determining that the data already on the schedule are correct, you have obtained the following information from the company’s records and personnel:

1.		Depreciation is calculated from the first day of the month of acquisition to the first day of the month of disposition.
2.		Land A and Building A were acquired together for $820,000. At the time of acquisition, the land had an appraised value of $90,000 and the building had an appraised value of $810,000.
3.		Land B was acquired on October 2, 2016, in exchange for 2,500 newly issued common shares. At the date of acquisition, the shares had a fair value of $30 each. During October 2016, Sing paid $16,000 to demolish an existing building on this land so that it could construct a new building.
4.		Construction of Building B on the newly acquired land began on October 1, 2017. By September 30, 2018, Sing had paid $320,000 of the estimated total construction costs of $450,000. It is estimated that the building will be completed and occupied by July 2019.
5.		Certain equipment was donated to the corporation by a local university. An independent appraisal of the equipment when it was donated estimated its fair value at $30,000 and the residual value at $3,000.
6.		Machine A’s total cost of $164,900 includes an installation expense of $600 and normal repairs and maintenance of $14,900. Its residual value is estimated at $6,000. Machine A was sold on February 1, 2018.
7.		On October 1, 2017, Machine B was acquired with a down payment of $5,740 and the remaining payments to be made in 11 annual instalments of $6,000 each, beginning October 1, 2017. The prevailing interest rate was 8%. The following data were determined from present-value tables and are rounded:

PV of $1 at 8%				PV of an Ordinary Annuity of $1 at 8%
10 years		0.463		10 years		6.710
11 years		0.429		11 years		7.139
15 years		0.315		15 years		8.559

When would it be appropriate for management to use different depreciation policies as they have done for Machines A and B?​

Answer 1

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you. Giving below cost of all the assets. Depreciation can not be determined as Life/Method/salvage value not given for all
Working for Event 2
	Appraised Value	Ratio	Allocated Value 820000*% Ratio
Land A	$                                 90,000	10%	$                                              82,000
Building A	$                              810,000	90%	$                                            738,000
Total	$                              900,000	100%	$                                            820,000

Working for Event 3
Cost of Land B
(No of Share* Fair Value)	2500*30	$         75,000
add: Demolition Cost		$         16,000
Cost of Land B		$         91,000

Working for Event 4
Depreciation for 2015 and 2016 will be NIL as usages is yet to commence
Working for Event 5
Cost of donated equipment	Fair value	$         30,000

Working for Event 6
Cost of Machine A	164900-14900	$       150,000

Working for Event 7
Cost of Machine B:
Down Payment		$           5,740
PV of 5740 (PV 8%, 11 Year)	3500*7.139 (Working-1)	$         40,978
Cost of Machine B		$         46,718