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Question: At December 31, 2017, Cord Company's plant asset and accumulated depreciation and amortization ac...

At December 31, 2017, Cord Company's plant asset and accumulated depreciation and amortization accounts had balances as follows:

Category	Plant Asset				Accumulated Depreciation and Amortization
Land	$	180,000			$	—
Buildings		1,750,000				333,900
Machinery and equipment		1,375,000				322,500
Automobiles and trucks		177,000				105,325
Leasehold improvements		226,000				113,000
Land improvements		—				—

Depreciation methods and useful lives:
Buildings—150% declining balance; 25 years.
Machinery and equipment—Straight line; 10 years.
Automobiles and trucks—150% declining balance; 5 years, all acquired after 2014.
Leasehold improvements—Straight line.
Land improvements—Straight line.

Depreciation is computed to the nearest month and residual values are immaterial. Transactions during 2018 and other information:

On January 6, 2018, a plant facility consisting of land and building was acquired from King Corp. in exchange for 30,000 shares of Cord's common stock. On this date, Cord's stock had a fair value of $40 a share. Current assessed values of land and building for property tax purposes are $160,000 and $640,000, respectively.

On March 25, 2018, new parking lots, streets, and sidewalks at the acquired plant facility were completed at a total cost of $222,000. These expenditures had an estimated useful life of 12 years.

The leasehold improvements were completed on December 31, 2014, and had an estimated useful life of eight years. The related lease, which would terminate on December 31, 2020, was renewable for an additional four-year term. On April 30, 2018, Cord exercised the renewal option.

On July 1, 2018, machinery and equipment were purchased at a total invoice cost of $330,000. Additional costs of $12,000 for delivery and $55,000 for installation were incurred.

On August 30, 2018, Cord purchased a new automobile for $13,000.

On September 30, 2018, a truck with a cost of $24,500 and a book value of $10,000 on date of sale was sold for $12,000. Depreciation for the nine months ended September 30, 2018, was $2,250.

On December 20, 2018, a machine with a cost of $19,500 and a book value of $3,100 at date of disposition was scrapped without cash recovery.

Required:

1. Prepare a schedule analyzing the changes in each of the plant asset accounts during 2018. Do not analyze changes in accumulated depreciation and amortization.
2. For each asset category, prepare a schedule showing depreciation or amortization expense for the year ended December 31, 2018.

I need help with the second requirement.

Answer 1

Requirement 2: Prepare the depreciation and amortization expense schedule as follows:

Depreciation and Amortization Schedule
Particulars	Amount
Buildings	$123,366
Machinery and equipment	$157,350
Automobiles and trucks	$21,377.50
Leasehold improvements	$22,600
Land improvements	$13,875
Total depreciation and amortization expense	$338,569

Notes:
Depreciation expense on buildings
Buildings-Beginning balance	$1,750,000
Less: Accumulated depreciation	($333,900)
	$1,416,100
Add: Buildings acquired during 2018	$640,000
Depreciable amount	$2,056,100
Depreciation rate (1÷ 25 years) × 150%	6%
Total depreciation expense on buildings		$123,366
Depreciation expense on machinery and equipment
Machinery and equipment-Beginning balance	$1,375,000
Depreciation rate (1÷10)	10%
Depreciation expense		$137,500
Machinery acquired during the year	$330,000
Add: Delivery cost	$12,000
Add: Installation cost	$55,000
Total depreciable amount	$397,000
Depreciation rate for half year (1÷10 × 50%)	5%
Depreciation expense		$19,850
Total depreciation expense on machinery and equipment		$157,350
Depreciation expense on automobiles and trucks
Automobiles and trucks-Beginning balance	$177,000
Less: Accumulated depreciation	($105,325)
	$71,675
Less: Automobile sold during the year ($10,000 + $2,250)	($12,250)
Depreciable amount	$59,425
Depreciation rate (1÷ 5 years) × 150%	30%
Depreciation expense		$17,827.50
New automobile purchased during the year	$13,000
Depreciation rate (1÷ 5 years) × 150% × (4 ÷ 12)	10%
Depreciation expense on new automobile for 4 months		$1,300
Depreciation expense on automobile sold		$2,250
Total depreciation expense on automobiles and trucks		$21,377.50
Amortization expense on leasehold improvements
Leasehold improvements-Beginning balance	$226,000
Less: Accumulated amortization	($113,000)
	$113,000
Amortization rate (1÷ 5 years)	20%
Total amortization expense on leasehold improvements		$22,600
Depreciation expense on land improvements
Total cost of improvements-Beginning balance	$222,000
Depreciation rate (1÷ 12 years) × 9 ÷ 12	6.25%
Total depreciation expense on land improvements		$13,875