Question

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	$	179,000			$	—
Buildings		1,700,000				332,900
Machinery and equipment		1,325,000				321,500
Automobiles and trucks		176,000				104,325
Leasehold improvements		224,000				112,000
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 29,000 shares of Cord's common stock. On this date, Cord's stock had a fair value of $60 a share. Current assessed values of land and building for property tax purposes are $237,000 and $553,000, respectively. On March 25, 2018, new parking lots, streets, and sidewalks at the acquired plant facility were completed at a total cost of $216,000. 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 $329,000. Additional costs of $11,000 for delivery and $54,000 for installation were incurred. On August 30, 2018, Cord purchased a new automobile for $12,900. On September 30, 2018, a truck with a cost of $24,400 and a book value of $9,800 on date of sale was sold for $11,900. Depreciation for the nine months ended September 30, 2018, was $2,205. On December 20, 2018, a machine with a cost of $19,000 and a book value of $3,075 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.

Answer 1

Answer 1.
	Beginning Balance	Increase	Decrease	Ending Balance
Land	179,000.00	522,000.00		701,000.00
Land Improvements	-	216,000.00		216,000.00
Buildings	1,700,000.00	1,218,000.00		2,918,000.00
Machinery & Equipment	1,325,000.00	394,000.00	(19,000.00)	1,700,000.00
Auto & Truck	176,000.00	12,900.00	(24,400.00)	164,500.00
Leasehold Improvements	224,000.00			224,000.00
Total	3,604,000.00	2,362,900.00	(43,400.00)	5,923,500.00
	Fair Value	Weights	Amount
Land	237,000.00	30%	522,000.00
Buildings	553,000.00	70%	1,218,000.00
Total	790,000.00		1,740,000.00
Answer 2.
Depreciation Expense
Land Improvements - 12 Years Life - Straight Line = ($216,000 / 12 Years ) X 9/12 = $13,500
Buildings - 25 Years = 150% Declining Balance = 1/25 X 1.50 = 6%
Outstanding Entire Year - (1,700,000 - $332,900) X 6%		82,026.00
Addition - $1,218,000 X 6%		73,080.00
Total		155,106.00
Machinery & Equipment - 10 Year - Straight Line
O/s Entire year - ($1,325,000 - 19,000) / 10 Years		130,600.00
Addition - ($394,000 / 10 Years) X 6/12		19,700.00
Disposition - ($19,000 / 10 Years) X 12/12		1,900.00
Total		152,200.00
Auto & Trucks - 150% Declining Method
O/s Entire Year - [($176,000 - $104,325) - 19,000 - (14,600 - 2,205)] = $65,070 X 30%		19,521.00
Additions - $12,900 X 30% X 4/12		1,290.00
Disposition		2,205.00
Total Depreciation		23,016.00
Leasehold Improvements - 5 Years per Item - straight Line
Book Value - ($224,000 - $112,000) / 5 Years		22,400.00
Total Depreciation & Amortization
Land Improvements	13,500.00
Buildings	155,106.00
Machinery & Equipment	152,200.00
Auto & Trucks	23,016.00
Leasehold Improvements	22,400.00
Total	366,222.00