Question

Problem 9-4A

At January 1, 2017, Carla Vista Co. reported the following property, plant, and equipment accounts:

Accumulated depreciation—buildings
$60,300,000
Accumulated depreciation—equipment
54,700,000
Buildings
97,500,000
Equipment
150,650,000
Land
20,800,000

The company uses straight-line depreciation for buildings and equipment, its year-end is December 31, and it makes adjusting entries annually. The buildings are estimated to have a 40-year useful life and no salvage value; the equipment is estimated to have a 10-year useful life and no salvage value.

During 2017, the following selected transactions occurred:

Apr. 1
Purchased land for $4.60 million. Paid $1.150 million cash and issued a 3-year, 6% note payable for the balance. Interest on the note is payable annually each April 1.
May 1
Sold equipment for $240,000 cash. The equipment cost $3.60 million when originally purchased on January 1, 2009.
June 1
Sold land for $4.68 million. Received $690,000 cash and accepted a 3-year, 5% note for the balance. The land cost $1.50 million when purchased on June 1, 2011. Interest on the note is due annually each June 1.
July 1
Purchased equipment for $2.90 million cash.
Dec. 31
Retired equipment that cost $1 million when purchased on December 31, 2007. No proceeds were received.

Record the above transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date
Account Titles and Explanation
Debit
Credit
choose a transaction date

April 1
May 1
June 1
July 1
Dec. 31
enter an account title
enter a debit amount
enter a credit amoun
enter an account title
enter a debit amount
enter a credit amoun
enter an account title
enter a debit amount
enter a credit amoun
choose a transaction date

April 1
May 1
June 1
July 1
Dec. 31
enter an account title to record depreciation expense
enter a debit amount
enter a credit amoun
enter an account title to record depreciation expense
enter a debit amount
enter a credit amoun
(To record depreciation expense)
May 1
enter an account title to record sale of equipment on May 1
enter a debit amount
enter a credit amoun
enter an account title to record sale of equipment on May 1
enter a debit amount
enter a credit amoun
enter an account title to record sale of equipment on May 1
enter a debit amount
enter a credit amoun
enter an account title to record sale of equipment on May 1
enter a debit amount
enter a credit amoun
(To record sale of equipment)
June 1
enter an account title on June 1
enter a debit amount
enter a credit amoun
enter an account title on June 1
enter a debit amount
enter a credit amoun
enter an account title on June 1
enter a debit amount
enter a credit amoun
enter an account title on June 1
enter a debit amount
enter a credit amoun
choose a transaction date

April 1
May 1
June 1
July 1
Dec. 31
enter an account title
enter a debit amount
enter a credit amoun
enter an account title
enter a debit amount
enter a credit amoun
choose a transaction date

April 1
May 1
June 1
July 1
Dec. 31
enter an account title to record depreciation expense
enter a debit amount
enter a credit amoun
enter an account title to record depreciation expense
enter a debit amount
enter a credit amoun
(To record depreciation expense)
choose a transaction date

April 1
May 1
June 1
July 1
Dec. 31
enter an account title to record disposal of equipment
enter a debit amount
enter a credit amoun
enter an account title to record disposal of equipment
enter a debit amount
enter a credit amoun
(To record disposal of equipment)

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Record any adjusting entries required at December 31. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date
Account Titles and Explanation
Debit
Credit
Dec. 31
enter an account title to record depreciation expense for buildings
enter a debit amount
enter a credit amount
enter an account title to record depreciation expense for buildings
enter a debit amount
enter a credit amount
(To record depreciation expense for buildings)
Dec. 31
enter an account title to record depreciation expense for equipment
enter a debit amount
enter a credit amount
enter an account title to record depreciation expense for equipment
enter a debit amount
enter a credit amount
(To record depreciation expense for equipment)
Dec. 31
enter an account title to record interest incurred but not yet paid
enter a debit amount
enter a credit amount
enter an account title to record interest incurred but not yet paid
enter a debit amount
enter a credit amount
(To record interest incurred but not yet paid)
Dec. 31
enter an account title to record interest accrued but not yet received
enter a debit amount
enter a credit amount
enter an account title to record interest accrued but not yet received
enter a debit amount
enter a credit amount
(To record interest accrued but not yet received)

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Prepare the property, plant, and equipment section of the company’s statement of financial position at December 31. (List Property, Plant and Equipment in order of Land, Buildings and Equipment.)

CARLA VISTA CO.
Statement of Financial Position (Partial)
choose an accounting period

For the Month Ended December 31, 2017
For the Year Ended December 31, 2017
December 31, 2017
select an opening section name

Current Assets
Current Liabilities
Intangible Assets
Long-term Investments
Long-term Liabilities
Property, Plant and Equipment
Stockholders' Equity
Total Assets
Total Current Assets
Total Current Liabilities
Total Intangible Assets
Total Liabilities
Total Liabilities and Stockholders' Equity
Total Long-term Investments
Total Long-term Liabilities
Total Property, Plant and Equipment
Total Stockholders' Equity
enter a balance sheet item
$enter a dollar amount
enter a balance sheet item
$enter a dollar amount
select between addition and deduction
    
Add    
Less    
: enter a balance sheet item
enter a dollar amount
enter a subtotal of the two previous amounts
enter a balance sheet item
enter a dollar amount
select between addition and deduction
    
Less    
Add    
: enter a balance sheet item
enter a dollar amount
enter a subtotal of the two previous amounts
select a closing section name
    
Current Assets    
Current Liabilities    
Intangible Assets    
Long-term Investments    
Long-term Liabilities    
Property, Plant and Equipment    
Stockholders' Equity    
Total Assets    
Total Current Assets    
Total Current Liabilities    
Total Intangible Assets    
Total Liabilities    
Total Liabilities and Stockholders' Equity    
Total Long-term Investments    
Total Long-term Liabilities    
Total Property, Plant and Equipment    
Total Stockholders' Equity    

Answer 1

a)	Ápril 1	Land	4600000
		Cash		1150000
		Mortgage Payable		3450000
	May 1	Depreciation Expense	120000
		Accumulated Depreciation- Eqipment		120000
		($3,600,000 ÷ 10 × 4/12 = $120000)
	1	Cash	240000
		Accumulated Depreciation- Eqipment	3000000
		Loss on Disposal	360000
		Equipment		36000000
		Equipment Cost	3600000
		Accumulated Depreciation- Eqipment	3000000
		[($3,600,000 ÷ 10) × 8 + $120,000)]
		Carrying amount	600000
		Cash proceeds	240000
		Loss on Disposal	(360000)
	June 1	Cash	690000
		Notes Receivable	3990000
		Land		1500000
		Gain on Disposal		3180000
	July 1	Equipment	2900000
		Cash		2900000
	Dec 31	Depreciation Expense	100000
		Accumulated Depreciation - Equipment		100000
		($1,000,000 ÷ 10 = $100,000)
	31	Accumulated Depreciation - Equipment	1000000
		Equipment		1000000

b)	Dec. 31	Depreciation Expense	2437500
		Accumulated Depreciation - Building		2437500
		($97,500,000 ÷ 40 = $2,437,500)
	31	Depreciation Expense	14460000
		Accumulated Depreciation - Equipment		14460000
		146050000 / 10	14605000
		$2,900,000 ÷ 10 × 6/12	145000
			14460000
		* $150,650,000 – $3,600,000 – $1,000,000 = $146,050,000
	31	Interest Expense	155250
		Interest Payable		155250
		($3,450,000 × 6% × 9/12 = $155,250)
	31	interest Receivable	116375
		Interest Revenue		116375
		(3,990,000 × 5% × 7/12 = $116,375))