In: Accounting
The property, plant, and equipment section of the Jasper Company’s December 31, 2017, balance sheet contained the following:
Property, plant, and equipment: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Land | $ | 130,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Building | $ | 800,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less: Accumulated depreciation | (250,000 | ) | 550,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equipment | 186,900 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less: Accumulated depreciation | ? | ? | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total property, plant, and equipment | ? | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Requirement 1
Machine 101:
$66,400 - 8,000
= $7,300 per year x 3 years = $ 21,900
8 years
Machine 102:
$79,000 - 9,000
= $10,000 per year x 1.5 years = 15,000
7 years
Machine 103:
$41,500 - 4,000
= $3,750 per year x 4/12 = 1,250
10 years
Accumulated depreciation, 12/31/17 $38,150
Requirement 2,3 & 4
To record depreciation on machine 102 through date of sale.
March 31, 2018
Depreciation expense ($10,000 per year x 3/12)................. 2,500
Accumulated depreciation - equipment................... 2,500
To record sale of equipment.
March 31, 2018
Cash.......................................................................... 49,000
Accumulated depreciation ($15,000 + 2,500).................. 17,500
Loss on sale of equipment (determined below)................ 12,500
Equipment............................................................. 79,000
Loss on sale of machine 102:
Proceeds $49,000
Less book value on 3/31/18:
Cost $79,000
Less accumulated depreciation:
Depreciation through 12/31/17 $15,000
Depreciation from 1/1/18 to
3/31/18 ($10,000 x 3/12) 2,500 17,500 61,500
Loss on sale $12,500
Requirement 5
Building:
Useful life of the building:
$250,000
= $50,000 in depreciation per year
5 years
(2013-2017)
$800,000 - 50,000
= 15-year useful life
$50,000
To record depreciation on the building.
Depreciation expense [($800,000 - 50,000) ÷ 15 years]....... 50,000
Accumulated depreciation - building...................... 50,000
To record depreciation on the equipment.
Depreciation expense (determined below)....................... 26,000
Accumulated depreciation - equipment................... 26,000
Equipment:
Machine 103 (determined above) $ 3,750
Machine 101:
Cost $66,400
Less: Accumulated depreciation 21,900
Book value, 12/31/17 44,500
Revised remaining life (5 years - 3 years) ÷ 2 years 22,250
$26,000