In: Accounting
The plant asset and accumulated depreciation accounts of Pell
Corporation had the following balances at December 31,
2017:
Plant Asset |
Accumulated Depreciation |
||||||
Land | $ | 345,000 | $ | 0 | |||
Land improvements | 178,500 | 44,000 | |||||
Building | 1,490,000 | 345,000 | |||||
Machinery and equipment | 1,148,000 | 400,000 | |||||
Automobiles | 149,000 | 111,500 | |||||
Transactions during 2018 were as follows:
On January 2, 2018, machinery and equipment were purchased at a total invoice cost of $255,000, which included a $5,400 charge for freight. Installation costs of $26,000 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 $24,000. The fair value of the building on the day of the donation was $16,400.
On May 1, 2018, expenditures of $49,000 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 $37 per share. Pell paid legal fees and title insurance totaling $22,500. Shortly after acquisition, the building was razed at a cost of $34,000 in anticipation of new building construction in 2019.
On December 31, 2018, Pell purchased a small storage building by giving $15,000 cash and an old automobile purchased for $17,500 on January 1, 2017. Depreciation on the old automobile recorded through December 31, 2018, totaled $13,125. The fair value of the old automobile was $3,700.
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.)