Question

The plant asset and accumulated depreciation accounts of Pell Corporation had the following balances at December 31, 2017:

	Plant Asset				Accumulated Depreciation
Land	$	350,000			$	0
Land improvements		180,000				45,000
Building		1,500,000				350,000
Machinery and equipment		1,158,000				405,000
Automobiles		150,000				112,000

Transactions during 2018 were as follows:

On January 2, 2018, machinery and equipment were purchased at a total invoice cost of $260,000, which included a $5,500 charge for freight. Installation costs of $27,000 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 $25,000. The fair value of the building on the day of the donation was $17,000.

On May 1, 2018, expenditures of $50,000 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 $38 per share. Pell paid legal fees and title insurance totaling $23,000. Shortly after acquisition, the building was razed at a cost of $35,000 in anticipation of new building construction in 2019.

On December 31, 2018, Pell purchased a small storage building by giving $15,250 cash and an old automobile purchased for $18,000 on January 1, 2017. Depreciation on the old automobile recorded through December 31, 2018, totaled $13,500. The fair value of the old automobile was $3,750.

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.)

Answer 1

Pell Corporation
schedule showing depreciation for the year ended December 31, 2018:
Plant Asset	Balances		Increase		Decrease	Balance on 12/31/18
Land	$350,000		4,38,000			$788,000
			(380000+23000+35000)
Land improvements	1,80,000					$180,000
Buildings	15,00,000		17,000			$1,517,000
Machinery and equipment	11,58,000		2,87,000			$1,445,000
Automobiles and trucks	1,50,000		19,000		18,000	$151,000
			(15250+3750)
Total	$3,338,000		$761,000		$18,000	$4,081,000
Answer
	Depreciation
Land improvements	$12,000	(1,80,000/15)
Buildings	87,206
Machinery and Equipment	1,44,500
Automobiles and trucks	19,000
Total depreciation	2,62,706
working: calculation of depreciation
Buildings
Rate of dep=1/20*150%	7.50%
((1500000-350000)*7.5%)+(17000*7.5%*9/12)			87,206
Machinery and equipment			1,44,500
(1158000/10)+(287000/10)
Automobiles and trucks
Rate of dep=1/3*150%		50%
(1,50,000-1,12,000)*50%		19,000
Note:For item 3rd it’s a repair expenses of $50,000