China Express purchased land for $140,000. Prior to construction on the new building, the land had to be cleared of trees and brush. Construction costs incurred during the first year are listed below:
Land clearing costs
$ 5,000
Architect fees (for new building)
30,000
Legal fees for title investigation of land
1,000
Property taxes on land (for the first year)
2,500
Building construction costs
440,000
Required:
Determine the amounts that should be recorded in the land and the new building accounts.
2. Diamond Autobody purchased some new equipment. The new equipment cost $90,000. The company estimates the equipment will have a residual value of $10,000. Cheetah Copy also estimates it will use the equipment for four years or about 5,000 total hours.
Required:
Prepare a depreciation schedule for three years using the following methods:
1. Straight-line.
2. Double-declining-balance.
3. Activity-based. Actual use per year was as follows:
Year
Hours Used
1
1,200
2
1,400
3
1,500
4
1,100
3. The Snack Stop had the following long-term asset balances as of January 1, 2015:
Cost
Accumulated
Depreciation
Book
Value
Land
$90,000
â
$90,000
Building
600,000
($60,000)
540,000
Equipment
200,000
(72,000)
128,000
All of the assets were purchased at the beginning of 2013. The building is depreciated over a 20-year service life using the straight-line method and estimating no residual value. The equipment is depreciated over a 10-year useful life using the double-declining-balance method with an estimated residual value of $10,000. Depreciation has already been calculated for the first two years.
Required:
1. For the year ended December 31, 2015, record depreciation expense for buildings and equipment. Land is not depreciated.
2. Calculate the book value for each of the four long-term assets at December 31, 2015.
China Express purchased land for $140,000. Prior to construction on the new building, the land had to be cleared of trees and brush. Construction costs incurred during the first year are listed below:
| Land clearing costs | $ 5,000 |
| Architect fees (for new building) | 30,000 |
| Legal fees for title investigation of land | 1,000 |
| Property taxes on land (for the first year) | 2,500 |
| Building construction costs | 440,000 |
Required:
Determine the amounts that should be recorded in the land and the new building accounts.
2. Diamond Autobody purchased some new equipment. The new equipment cost $90,000. The company estimates the equipment will have a residual value of $10,000. Cheetah Copy also estimates it will use the equipment for four years or about 5,000 total hours.
Required:
Prepare a depreciation schedule for three years using the following methods:
1. Straight-line.
2. Double-declining-balance.
3. Activity-based. Actual use per year was as follows:
| Year | Hours Used |
| 1 | 1,200 |
| 2 | 1,400 |
| 3 | 1,500 |
| 4 | 1,100 |
3. The Snack Stop had the following long-term asset balances as of January 1, 2015:
| Cost | Accumulated Depreciation | Book Value | ||||
| Land | $90,000 | â | $90,000 | |||
| Building | 600,000 | ($60,000) | 540,000 | |||
| Equipment | 200,000 | (72,000) | 128,000 |
All of the assets were purchased at the beginning of 2013. The building is depreciated over a 20-year service life using the straight-line method and estimating no residual value. The equipment is depreciated over a 10-year useful life using the double-declining-balance method with an estimated residual value of $10,000. Depreciation has already been calculated for the first two years.
Required:
1. For the year ended December 31, 2015, record depreciation expense for buildings and equipment. Land is not depreciated.
2. Calculate the book value for each of the four long-term assets at December 31, 2015.
Related questions
Samtech Manufacturing purchased land and building for $5million. In addition to the purchase price, Samtech made thefollowing expenditures in connection with the purchase of the landand building: Title insurance $ 24,000 Legal fees for drawing thecontract 9,000 Pro-rated property taxes for the period afteracquisition 44,000 State transfer fees 4,800 An independentappraisal estimated the fair values of the land and building, ifpurchased separately, at $4.2 and $1.8 million, respectively.Shortly after acquisition, Samtech spent $90,000 to construct aparking lot and $48,000 for landscaping. Required:
1. Determine the initial valuation of each asset Samtechacquired in these transactions. (Enter your answers in wholedollars.)
|
2. Determine the initial valuation of each asset, assuming thatimmediately after acquisition, Samtech demolished the building.Demolition costs were $330,000 and the salvaged materials were soldfor $5,000. In addition, Samtech spent $87,000 clearing and gradingthe land in preparation for the construction of a new building.(Enter your answers in whole dollars.)
|
