ADM 1300 Study Guide - Final Guide: Book Value, Asset Turnover, Asset
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At December 31, 2015, Cord Company's plant asset and accumulateddepreciation and amortization accounts had balances as follows: |
| Category | Plant Asset | Accumulated Depreciation and Amortization | ||||
| Land | $ | 178,000 | $ | — | ||
| Buildings | 1,650,000 | 331,900 | ||||
| Machinery andequipment | 1,275,000 | 320,500 | ||||
| Automobiles andtrucks | 175,000 | 103,325 | ||||
| Leaseholdimprovements | 222,000 | 111,000 | ||||
| Landimprovements | — | — | ||||
| Depreciation methods and usefullives: |
| Buildings—150% decliningbalance; 25 years. |
| Machinery and equipment—Straightline; 10 years. |
| Automobiles and trucks—150%declining balance; 5 years, all acquired after 2012. |
| Leasehold improvements—Straightline. |
| Land improvements—Straightline. |
Depreciation is computed to thenearest month and residual values are immaterial. Transactionsduring 2016 and other information: |
| a. | On January 6, 2016, a plant facility consisting of land andbuilding was acquired from King Corp. in exchange for 28,000 sharesof Cord's common stock. On this date, Cord's stock had a fair valueof $50 a share. Current assessed values of land and building forproperty tax purposes are $195,000 and $585,000, respectively. |
| b. | On March 25, 2016, new parking lots, streets, and sidewalks atthe acquired plant facility were completed at a total cost of$210,000. These expenditures had an estimated useful life of 12years. |
| c. | The leasehold improvements were completed on December 31, 2012,and had an estimated useful life of eight years. The related lease,which would terminate on December 31, 2018, was renewable for anadditional four-year term. On April 29, 2016, Cord exercised therenewal option. |
| d. | On July 1, 2016, machinery and equipment were purchased at atotal invoice cost of $328,000. Additional costs of $10,000 fordelivery and $53,000 for installation were incurred. |
| e. | On August 30, 2016,Cord purchased a new automobile for $12,800. |
| f. | On September 30, 2016, a truck with a cost of $24,300 and a bookvalue of $9,600 on date of sale was sold for $11,800. Depreciationfor the nine months ended September 30, 2016, was $2,160. |
| g. | On December 20, 2016, a machine with a cost of $18,500 and abook value of $3,050 at date of disposition was scrapped withoutcash recovery. |
| Required: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1. | Prepare a schedule analyzing the changes in each of the plantasset accounts during 2016. Do not analyze changes in accumulateddepreciation and amortization. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Plant Asset | Accumulated Depreciation | |||||
| Land | $ | 400,000 | $ | 0 | ||
| Landimprovements | 195,000 | 55,000 | ||||
| Building | 1,600,000 | 400,000 | ||||
| Machinery andequipment | 1,258,000 | 455,000 | ||||
| Automobiles | 160,000 | 117,000 | ||||
| Transactions during 2013 were asfollows: | |
| a. | On January 2, 2013, machinery and equipment were purchased at atotal invoice cost of $310,000, which included a $6,500 charge forfreight. Installation costs of $37,000 were incurred. |
| b. | On March 31, 2013, a machine purchased for $68,000 in 2009 wassold for $41,500. Depreciation recorded through the date of saletotaled $28,900. |
| c. | On May 1, 2013, expenditures of $60,000 were made to repaveparking lots at Pell's plant location. The work was necessitated bydamage caused by severe winter weather. |
| d. | On November 1, 2013, Pell acquired a tract of land with anexisting building in exchange for 10,000 shares of Pell's commonstock that had a market price of $48 per share. Pell paid legalfees and title insurance totaling $28,000. Shortly afteracquisition, the building was razed at a cost of $45,000 inanticipation of new building construction in 2014. |
| e. | On December 31, 2013, Pell purchased a new automobile for$17,750 cash and trade-in of an old automobile purchased for$23,000 in 2009. Depreciation on the old automobile recordedthrough December 31, 2013, totaled $17,250. The fair value of theold automobile was $4,250. |
| Required: |
For each asset classification, prepare a schedule showingdepreciation expense for the year ended December 31, 2013, usingthe following depreciation methods and useful lives: |
| Land improvements—Straight line;15 years. |
| Building—150% declining balance;20 years. |
| Machinery and equipment—Straightline; 10 years. |
| Automobiles—150% decliningbalance; 3 years. |
| Depreciation is computed to the nearest month and noresidual values are used. (Do not round intermediatecalculations.) I am having issues coming up with the correct amount forMachinery and equipment below. Please help. I posted this questionpreviously and got a response of "152508.3" for theMachinery and equipment and it was not correct. Thank You! Here are the numbers I came up with. Missing the Machinery andequipment cost. PELL CORPORATION Depreciation Expense For the Year Ended December 31, 2013 Total depreciation expense for 2013 = |
At December 31, 2017,Cord Company's plant asset and accumulated depreciation andamortization accounts had balances as follows:
| Category | Plant Asset | Accumulated Depreciation and Amortization | |||||
| Land | $ | 180,000 | $ | — | |||
| Buildings | 1,750,000 | 333,900 | |||||
| Machinery andequipment | 1,375,000 | 322,500 | |||||
| Automobiles andtrucks | 177,000 | 105,325 | |||||
| Leaseholdimprovements | 226,000 | 113,000 | |||||
| Landimprovements | — | — | |||||
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, allacquired after 2014.
Leasehold improvements—Straight line.
Land improvements—Straight line.
Depreciation is computed to the nearest month and residual valuesare immaterial. Transactions during 2018 and otherinformation:
On January 6, 2018, a plant facility consisting of land andbuilding was acquired from King Corp. in exchange for 30,000 sharesof Cord's common stock. On this date, Cord's stock had a fair valueof $40 a share. Current assessed values of land and building forproperty tax purposes are $160,000 and $640,000, respectively.
On March 25, 2018, new parking lots, streets, and sidewalks atthe acquired plant facility were completed at a total cost of$222,000. These expenditures had an estimated useful life of 12years.
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 anadditional four-year term. On April 30, 2018, Cord exercised therenewal option.
On July 1, 2018, machinery and equipment were purchased at atotal invoice cost of $330,000. Additional costs of $12,000 fordelivery and $55,000 for installation were incurred.
On August 30, 2018, Cord purchased a new automobile for$13,000.
On September 30, 2018, a truck with a cost of $24,500 and a bookvalue of $10,000 on date of sale was sold for $12,000. Depreciationfor the nine months ended September 30, 2018, was $2,250.
On December 20, 2018, a machine with a cost of $19,500 and abook value of $3,100 at date of disposition was scrapped withoutcash recovery.
Required:
1.Prepare a schedule analyzing the changes in each of the plant assetaccounts during 2018. Do not analyze changes in accumulateddepreciation and amortization.
2. For each asset category, prepare a scheduleshowing depreciation or amortization expense for the year endedDecember 31, 2018.
