Question
In: Accounting
The plant asset and accumulated depreciation accounts of Pell Corporation had the following balances at December...
The plant asset and accumulated depreciation accounts of Pell
Corporation had the following balances at December 31,
2017:
| Plant Asset |
Accumulated Depreciation |
||||||
| Land | $ | 375,000 | $ | 0 | |||
| Land improvements | 187,500 | 50,000 | |||||
| Building | 1,550,000 | 375,000 | |||||
| Machinery and equipment | 1,208,000 | 430,000 | |||||
| Automobiles | 155,000 | 114,500 | |||||
Transactions during 2018 were as follows:
On January 2, 2018, machinery and equipment were purchased at a total invoice cost of $285,000, which included a $6,000 charge for freight. Installation costs of $32,000 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 $30,000. The fair value of the building on the day of the donation was $19,400.
On May 1, 2018, expenditures of $55,000 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 $43 per share. Pell paid legal fees and title insurance totaling $25,500. Shortly after acquisition, the building was razed at a cost of $40,000 in anticipation of new building construction in 2019.
On December 31, 2018, Pell purchased a small storage building by giving $16,500 cash and an old automobile purchased for $20,500 on January 1, 2017. Depreciation on the old automobile recorded through December 31, 2018, totaled $15,375. The fair value of the old automobile was $4,000.
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.)
Solutions
Expert Solution
| PELL CORPORATION | ||||
| Depreciation Expenses | ||||
| For the year ended December 31,2018 | $ | |||
| Land Improvement | 12,000.00 | |||
| Building | 90,375.00 | |||
| Machinery & Equipment | 152,500.00 | |||
| Automobiles | 20,250.00 | |||
| Total Depreciation expenses for 2018 | 275,125.00 | |||
| WORKING NOTE 1 | ||||
| BALANCE | INCREASE | DECREASE | BALANCE | |
| 31/12/2017 | 31/12/2018 | |||
| Land | 375,000.00 | 495,000.00 | 870,000.00 | |
| (43000+25500+40000) | ||||
| Land Improvement | 180,000.00 | 180,000.00 | ||
| Building | 1,550,000.00 | 30000 | 1,520,000.00 | |
| Machinery & Equipment | 1,208,000.00 | 317,000.00 | 1,525,000.00 | |
| (285000+32000) | ||||
| Automobiles | 155,000.00 | 20,500.00 | 20,500.00 | 155,000 |
| (16500+4000) | ||||
| WORKING NOTE 2 | ||||
| DEPRECIATION | ||||
| Land Improvement : | ||||
| Outstanding for entire year- 180000/15= $12000 | ||||
| Building : | ||||
| Outstanding for entire year- (1550000-368744)*7.5/100 = $88594 | ||||
| Disposition, 31/03/2018- (30000-6256)*7.5/100 = $1781 | ||||
| $90,375 | ||||
| Machinery and equipment: | ||||
| Outstanding for entire year- 1208000/10= $120800 | ||||
| Addition- 317000/10= $31700 | ||||
| $152,500 | ||||
| Automobiles: | ||||
| Outstanding for entire year- (155000-114500)*50%=$20250 | ||||
ekkarill92 answered 1 year agoRelated Solutions
The plant asset and accumulated depreciation accounts of Pell Corporation had the following balances at December...
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Land
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$
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45,000
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350,000
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Plant Asset
Accumulated
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Land
$
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$
—
Land
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245,000
58,000
Building
2,150,000
363,000
Machinery and
equipment
1,184,000
418,000
Automobiles
215,000
125,000
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a.
On January 2, 2016, machinery and equipment were purchased at a
total invoice cost of $325,000, which included a $6,800 charge for
freight. Installation costs of $40,000 were incurred.
b.
On...
The plant asset and accumulated depreciation accounts of Pell Corporation had the following balances at December...
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$365,000
$0
Land Impovements
184,500
48,000
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1,530,000
365,000
Machinery & Equipment
1,188,000
420,000
Automobiles
153,000
113,500
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$
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$
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—
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