Question

Problem 7-4

At January 1, 2017, Sunland Company reported the following property, plant, and equipment accounts:

Accumulated depreciation—buildings		$63,750,000
Accumulated depreciation—equipment		52,750,000
Buildings		97,400,000
Equipment		150,450,000
Land		20,650,000

The company uses straight-line depreciation for buildings and equipment, its year-end is December 31, and it makes adjustments 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 $4.30 million. Paid $1.075 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 $290,000 cash. The equipment cost $3.72 million when originally purchased on January 1, 2009.
June 1		Sold land for $5.88 million. Received $660,000 cash and accepted a 3-year, 5% note for the balance. The land cost $1.70 million when purchased on June 1, 2011. Interest on the note is due annually each June 1.
July 1		Purchased equipment for $2.20 million cash.
Dec. 31		Retired equipment that cost $1 million when purchased on December 31, 2007. No proceeds were received. .

a.)Prepare a tabular summary that includes the property, plant, and equipment balances as of January 1, 2017

b.)Record the above transactions in the tabular summary from part (a).

c.)Record any adjustments required at December 31

d.)Prepare the property, plant, and equipment section of the company’s statement of financial position at December 31

Answer 1