In: Accounting
The plant asset and accumulated depreciation accounts of Pell Corporation had the following balances at December 31, 2015:
PLANT ASSET | ACCUM. DEPRECIATION | |
Land | $365,000 | $0 |
Land Impovements | 184,500 | 48,000 |
Building | 1,530,000 | 365,000 |
Machinery & Equipment | 1,188,000 | 420,000 |
Automobiles | 153,000 | 113,500 |
a. On January 2, 2016, machinery and equipment were purchased at a total invoice cost of $275,000, which included a $5,800 charge for freight. Installation costs of $30,000 were incurred.
b. On March 31, 2016, a machine purchased for $61,000 in 2012 was sold for $38,000. Depreciation recorded through the date of sale totaled $25,925.
c. On May 1, 2016, expenditures of $53,000 were made to repave parking lots at Pell's plant location. The work was necessitated by damage caused by severe winter weather.
d. On November 1, 2016, 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 $41 per share. Pell paid legal fees and title insurance totaling $24,500. Shortly after acquisition, the building was razed at a cost of $38,000 in anticipation of new building construction in 2017.
e. On December 31, 2016, Pell purchased a new automobile for $16,000 cash and trade-in of an old automobile purchased for $19,500 in 2012. Depreciation on the old automobile recorded through December 31, 2016, totaled $14,625. The fair value of the old automobile was $3,900.
Required: For each asset classification, prepare a schedule showing depreciation for the year ended December 31, 2016, 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.)