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	$	181,000			$	—
Buildings		1,800,000				334,900
Machinery and equipment		1,425,000				323,500
Automobiles and trucks		178,000				106,325
Leasehold improvements		228,000				114,000
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 31,000 shares of Cord's common stock. On this date, Cord's stock had a fair value of $50 a share. Current assessed values of land and building for property tax purposes are $202,500 and $607,500, respectively.

On March 25, 2018, new parking lots, streets, and sidewalks at the acquired plant facility were completed at a total cost of $228,000. 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 $331,000. Additional costs of $10,000 for delivery and $56,000 for installation were incurred.

On August 30, 2018, Cord purchased a new automobile for $13,100.

On September 30, 2018, a truck with a cost of $24,600 and a book value of $10,200 on date of sale was sold for $12,100. Depreciation for the nine months ended September 30, 2018, was $2,295.

On December 20, 2018, a machine with a cost of $20,000 and a book value of $3,125 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

1) Schedule analysing changes in 2018

	Original Cost
Particulars	Opening Balance	Addition	Deletion	Closing Balance
Land	181000			181000
Buildings	1800000	1778000		3578000
Machinery & Equipment	1425000	397000	20000	1802000
Automobile & Truck	178000	13100	24600	166500
Lease hold improvement	228000			228000
Land Improvement

2) Statement of Depreciation for 2018

Particulars	Amt
Land	0
Buildings	180906
Machinery & Equipment	182200
Automobile & Truck	22813
Lease hold improvement	28500
Land Improvement	19000
Total	433419

Working of depreciation
Depreciation On Building	Amt eligible for Dep	Dep @6%
Opening Balance	1465100	87906
Addition in Jan	1550000	93000
Total		180906
Depreciation On Machinery	Amt eligible for Dep	Dep
Opening Balance	1425000	142500
Addition	397000	39700
Total		182200
Depreciation On Automobile	Amt eligible for Dep	Dep @30%
Opening Balance	71675	21503
Addition	13100	1310
Total		22813
Depreciation On Leasehold	Amt eligible for Dep	Dep
Opening Balance	228000	28500
Depreciation on Land improvement	Amt eligible for Dep	Dep
Addition	228000	19000