Question

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.)

Answer 1

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