Plant Assets, Natural Resources and intangible Assets

Venable Company was organized on January 1. During the first year of operations, the following plant asset expenditures and receipts were recorded in random order.
Debit
1.Cost of filling and grading the land$4,000
2.Full payment to building contractor690,000
3.Real estate taxes on land paid or the current year5,000
4.Cost of real estate purchased as a plant site (land $100,000 and building $45,000)145,000
5.Excavation costs for new building35,000
6.Architect's fees on building plans10,000
7.Accrued real estate taxes paid at time of purchase of real estate2,000
8.Cost of parking lots and driveways14,000
9.Cost of demolishing building to make land suitable for construction of new building25,000
$930,000
Credit
10.Proceeds from salvage of demolished building$3,500

Instructions

Analyze the foregoing transactions using the following column headings. Insert the number of each transaction in the Item space, and insert the amounts in the appropriate columns. For amounts entered in the Other Accounts column, also indicate the account titles.
ItemLandBuildingsOther Accounts

In recent years, Avery Transportation purchased three used buses. Because of frequent turnover in the accounting department, a different accountant selected the depreciation method for each bus, and various methods were selected. Information concerning the buses is summarized as follows.
BusAcquiredCostSalvage ValueUseful Life in YearsDepreciation Method
1.1/1/16$96,000$6,0005Straight-line
2.1/1/16110,00010,0004Declining balance
3.1/1/1792,0008,0005units-of-activity

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

Instructions

  1. Compute the amount of accumulated depreciation on each bus at December 31, 2019
  2. 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?

On January 1, 2019, Evers Company purchased the following two machines for use in its production process.
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

Instructions

  1. Prepare the following for Machine A
    1. The journal entry to record its purchase on January 1, 2019
    2. The journal entry to record annual depreciation at December 31, 2019.
  2. Calculate the amount of depreciation expense that Evers should record for Machine B each year of its useful life under the following assumptions.
    1. Evers uses the straight-line method of depreciation.
    2. Evers uses the declining-balance method. The rate used is twice the straight-line rate.
    3. 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.
  3. 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.

Instructions

Indicate how much depreciation expense should be recorded each year for this equipment, by completing the following table.

At December 31, 2019, Grand Company reported the following as plant assets.

During 2020, the following selecterd cash transactions occurred.

April 1Purchased land for $2,130,000.
May 1Sold equipment that cost $750,000 when purchased on January 1, 2016. The equipment was sold for $450,000.
June 1Sold land purchased on June 1, 2010 for $1,500,000. The land cost $400,000.
July 1Purchased equipment for $2,500,000.
Dec. 1Retired equipment that cost $500,000 when purchased on December 31, 2010. The company received no proceeds related to salvage.

Instructions

  1. 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.
  2. Record adjusting entries for depreciation for 2020.
  3. Prepare the plant assets section of Grand's balance sheet at December 31, 2020.

Ceda Co. has equipment that cost $80,000 and that has been depreciated $50,000.

Instructions

Record the disposal under the following assumptions.

  1. It was scrapped as having no value.
  2. It was sold for $21,000.
  3. It was sold for $31,000

The intangible assets section of Sappelt Company at December 31, 2019, is presented below.

Due to rapid turnover in the accounting department, a number of transactions involving intangible assets were improperly recorded by Goins Company in 2019.

LaPorta Company and Lott Corporation, two corporation of roughly the same size, are both involved in the manufacture of in-line skates. Each company depreciates its plant assets using the straight-line approach. An investigation of their financial statements reveals the following information.

The following expenditures relating to plant assets were made by Prather Company during the first 2 months of 2019.

Problems: Plant Assets, Natural Resources and intangible Assets

Problem-9: Plant Assets, Natural Resources and intangible Assets

LaPorta Company and Lott Corporation, two corporation of roughly the same size, are both involved in the manufacture of in-line skates. Each company depreciates its plant assets using the straight-line...

Problem-8: Plant Assets, Natural Resources and intangible Assets

Due to rapid turnover in the accounting department, a number of transactions involving intangible assets were improperly recorded by Goins Company in 2019.

Problem-7: Plant Assets, Natural Resources and intangible Assets

The intangible assets section of Sappelt Company at December 31, 2019, is presented below.

Problem-6: Plant Assets, Natural Resources and intangible Assets

Ceda Co. has equipment that cost $80,000 and that has been depreciated $50,000. Instructions Record the disposal under the following assumptions. It was scrapped as having no value. It was...

Problem-5: Plant Assets, Natural Resources and intangible Assets

At December 31, 2019, Grand Company reported the following as plant assets. During 2020, the following selecterd cash transactions occurred. April 1Purchased land for $2,130,000. May 1Sold equipment that cost...

Problem-4: Plant Assets, Natural Resources and intangible Assets

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...

Problem-3: Plant Assets, Natural Resources and intangible Assets

On January 1, 2019, Evers Company purchased the following two machines for use in its production process. Machine A: The cash price of this machine was $48,000. Related expenditures included:...

Problem-2: Plant Assets, Natural Resources and intangible Assets

In recent years, Avery Transportation purchased three used buses. Because of frequent turnover in the accounting department, a different accountant selected the depreciation method for each bus, and various methods...

Problem-1: Plant Assets, Natural Resources and intangible Assets

Venable Company was organized on January 1. During the first year of operations, the following plant asset expenditures and receipts were recorded in random order. Debit 1.Cost of filling and...

Problem-10: Plant Assets, Natural Resources and intangible Assets

The following expenditures relating to plant assets were made by Prather Company during the first 2 months of 2019.

Problem-12: Plant Assets, Natural Resources and intangible Assets

On March 1, 2019, Westmorian Company acquired real estate on which it planned to construct a small office buildings. The company paid $75,000 in cash. An old warehouse on the...

Problem-13: Plant Assets, Natural Resources and intangible Assets

Tom Parkey has prepared the following list of statements about depreciation. Depreciation is a process of asset valuation, not cost allocation. Depreciation provides for the proper matching of expenses with...

Problem-14: Plant Assets, Natural Resources and intangible Assets

Yello Bus lines uses the units-of-activity method in depreciating its buses. One bus was purchased on January 1, 2019, at a cost of $148,000. Over its 4-year useful life, the...

Problem-15: Plant Assets, Natural Resources and intangible Assets

Rottino Company purchased a new machine on October 1, 2019, at a cost of $150,000. The company estimated that the machine will have a salvage value of $12,000. The machine...

Problem-16: Plant Assets, Natural Resources and intangible Assets

Linton Company purchased a delivery truck for $34,000 on January 1, 2019. The truck has an expected salvage value of $2,000, and s expected to be driven 100,000 miles over...

Problem-17: Plant Assets, Natural Resources and intangible Assets

Terry Wade, the new controller of Hellickson Company, has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2019. His findings as as...

Problem-18: Plant Assets, Natural Resources and intangible Assets

Presented below are selected transactions at Ridge Company for 2019.

Problem-19: Plant Assets, Natural Resources and intangible Assets

Pryce Company owns equipment that cost $65,000 when purchased on January 1, 2019. It ha been depreciated using the straight-line method based on estimated salvage value of $5,000 and an...

Problem-20: Plant Assets, Natural Resources and intangible Assets

On July 1, 2019, Friedman Inc. invested $720,000 In a mine estimated to have 900,000 tons of ore of uniform grade. During the last 6 months of 2019, 100,000 tons...

Problem-21: Plant Assets, Natural Resources and intangible Assets

The following are selected 2019 transactions of Pedigo Corporation.

Problem-22: Plant Assets, Natural Resources and intangible Assets

Gill Company, organized in 2019, has the following transactions related to intangible assets.

Problem-23: Plant Assets, Natural Resources and intangible Assets

During 2019, Paola Corporation reported net sales of $3,500,000 and net income of $1,500,000. Its balance sheet reported average total assets of $1,400,000.

Problem-24: Plant Assets, Natural Resources and intangible Assets

Presented below are two independent transactions. Both transactions have commercial substance. Mercy Co. exchanged old trucks (cost $64,000 less $22,000 accumulated depreciation) plus cash of $17,000 for new trucks. The...

Problem-25: Plant Assets, Natural Resources and intangible Assets

Rizzo's Delivery Company and Overland's Express Delivery exchanged delivery trucks on January 1, 2019. Rizzo's truck cost $22,000. It has accumulated depreciation of $15,000 and a fair value of $3,000....

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