Question

Selected accounts included in the property, plant, and equipment section of Pearl Corporation’s balance sheet at December 31, 2019, had the following balances.

Land $438,000

Land improvements 204,400

Buildings 1,606,000

Equipment 1,401,600

During 2020, the following transactions occurred.

1. A tract of land was acquired for $219,000 as a potential future building site.

2. A plant facility consisting of land and building was acquired from Mendota Company in exchange for 29,200 shares of Pearl’s common stock. On the acquisition date, Pearl’s stock had a closing market price of $37 per share on a national stock exchange. The plant facility was carried on Mendota’s books at $160,600 for land and $467,200 for the building at the exchange date. Current appraised values for the land and building, respectively, are $335,800 and $1,007,400.

3. Items of machinery and equipment were purchased at a total cost of $584,000. Additional costs were incurred as follows.

Freight and unloading $18,980

Sales taxes 29,200

Installation 37,960

4. Expenditures totaling $138,700 were made for new parking lots, streets, and sidewalks at the corporation’s various plant locations. These expenditures had an estimated useful life of 15 years.

5. A machine costing $116,800 on January 1, 2012, was scrapped on June 30, 2020. Double-declining-balance depreciation has been recorded on the basis of a 10-year life.

6. A machine was sold for $29,200 on July 1, 2020. Original cost of the machine was $64,240 on January 1, 2017, and it was depreciated on the straight-line basis over an estimated useful life of 7 years and a salvage value of $2,920.

(a) Calculate the balance at December 31, 2020 in each of the following balance sheet accounts. (Hint: Disregard the related accumulated depreciation accounts.)

Balance at December 31, 2020

Land?

Land Improvements?

Buildings?

Equipment?

Answer 1