Question

Property, plant, and equipment, at cost:

Land. . . . . . . . . . . . . . . . . . . . . . . . . . . .

$140,000

Buildings. . . . . . . . . . . . . . . . . . . . . . . .

700,000

Less: Accumulated depreciation. . . . . .

(344,000)

Equipment. . . . . . . . . . . . . . . . . . . . . . .

402,000

Less: Accumulated depreciation. . . . . .

(266,000)

On July 1

20192019​,

the resort expanded operations and purchased additional equipment for cash at a cost of$108,000.The company depreciates buildings using the​ straight-line method over 20 years with residual values of$82,000.Due to expected​ obsolescence, the equipment has a useful life of only 10 years and is being depreciated by the​ double-declining-balance method with a residual value of zero.

Requirement 1. Journalize

ContiLake​ Resort's plant asset purchase and depreciation transactions for2019.

​(Record debits​ first, then credits. Exclude explanations from any journal​ entries.)

Begin by journalizing the plant asset purchase.

​Next, journalize the depreciation on the buildings.

Now journalize the depreciation on the equipment.

Answer 1

Straight line Depreciation = (Original Value - Salvage Value) / Useful life
Double Declining Depreciation = Beginning Book Value x 2 times straight line rate

Account Titles	Debit	Credit
Equipment	$         1,08,000
Cash		$       1,08,000
(Purchase of Equipment for cash)
Depreciation Expense - Building	$            30,900		=(700000-82000)/20
Accumulated Depreciation - Building		$          30,900
(Depreciation on building)
Depreciation Expense - Equipment	$            38,000		=(402000-266000)*20%+108000*20%*6/12
Accumulated Depreciation - Equipment		$          38,000
(Depreciation on Equipment)