|1.||Cost of filling and grading the land||$4,000|
|2.||Full payment to building contractor||690,000|
|3.||Real estate taxes on land paid or the current year||5,000|
|4.||Cost of real estate purchased as a plant site (land $100,000 and building $45,000)||145,000|
|5.||Excavation costs for new building||35,000|
|6.||Architect's fees on building plans||10,000|
|7.||Accrued real estate taxes paid at time of purchase of real estate||2,000|
|8.||Cost of parking lots and driveways||14,000|
|9.||Cost of demolishing building to make land suitable for construction of new building||25,000|
|10.||Proceeds from salvage of demolished building||$3,500|
|Bus||Acquired||Cost||Salvage Value||Useful Life in Years||Depreciation Method|
For the declining-balance method, the company uses the double-declining rate. For the units-of-activity method, total miles are expected to be 120,000. Actualy miles of use in the first 3 years were 2018, 24,000, 2019, 34,000, and 2020, 30,000
- Compute the amount of accumulated depreciation on each bus at December 31, 2019
- If Bus 2 was purchased on April 1 instead of January 1,. What is the depreciation expense for this bus in (1) 2017 and (2) 2018?
|Machine A:||The cash price of this machine was $48,000. Related expenditures included: sales tax $1,700, shipping costs $150, insurance during shipping $80, installation and testing costs $70, and $100 of oil and lubricants to be used with the machinery during its first year of operations. Evers estimates that the useful life of the machine is 5 years with a $5,000 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used.|
|Machine B:||The recorded cost of this machine was $180,000. Evers estimates that the useful life of the machine is 4 years with a $10,000 salvage value remaining at the end of that time period|
- Prepare the following for Machine A
- The journal entry to record its purchase on January 1, 2019
- The journal entry to record annual depreciation at December 31, 2019.
- Calculate the amount of depreciation expense that Evers should record for Machine B each year of its useful life under the following assumptions.
- Evers uses the straight-line method of depreciation.
- Evers uses the declining-balance method. The rate used is twice the straight-line rate.
- Evers uses the units-of-activity method and estimates that the useful life of the machine is 125,000 units. Actual usage is as follows: 2019, 45,000 units: 2020, 35,000 units: 2021, 25,000 units: 2022, 20,000 units.
- Which method used to calculate depreciation on Machine B reports the highest amount of depreciation expense year 1 (2019)? The highest amount in year 4 (2022)? The highest total amount over the 4-year period?
At the beginning of 2015, Mazzaro Company acquired equipment costing $120,000. It was estimated that this equipment would have a useful life of 6 years and a salvage value of $12,000 at that time. The straight-line method of depreciation was considered the most appropriate to use with this type of equipment. Depreciation is to be recorded at the end of each year.
During 2021(the third year of the equipment’s life), the company’s engineers reconsidered their expectations, and estimated that the equipment’s useful life would probably be 7 years (in total) instead of 6 years,. The estimated salvage value was not changed at that time. However, during 2025 the estimated salvage value was reduced to $5,000.
Indicate how much depreciation expense should be recorded each year for this equipment, by completing the following table.
During 2020, the following selecterd cash transactions occurred.
|April 1||Purchased land for $2,130,000.|
|May 1||Sold equipment that cost $750,000 when purchased on January 1, 2016. The equipment was sold for $450,000.|
|June 1||Sold land purchased on June 1, 2010 for $1,500,000. The land cost $400,000.|
|July 1||Purchased equipment for $2,500,000.|
|Dec. 1||Retired equipment that cost $500,000 when purchased on December 31, 2010. The company received no proceeds related to salvage.|
- Journalize the above transactions. The company uses straight-line depreciation for buildings and equipment. the buildings are estimated to have a 50-year life and no salvage value. The equipment is estimated to have a 10-year useful life and no salvage value. Update depreciation on assets disposed of at the time of sale or retirement.
- Record adjusting entries for depreciation for 2020.
- Prepare the plant assets section of Grand's balance sheet at December 31, 2020.
Record the disposal under the following assumptions.
- It was scrapped as having no value.
- It was sold for $21,000.
- It was sold for $31,000
The following expenditures relating to plant assets were made by Prather Company during the first 2 months of 2019.
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