Problem 9-2A (Part Level Submission) At December 31, 2014, Navaro Corporation re

Question

Problem 9-2A (Part Level Submission)

At December 31, 2014, Navaro Corporation reported the following plant assets.

$ 5,196,000

$30,050,000

20,654,100

9,395,900

69,280,000

8,660,000

60,620,000

$75,211,900

During 2015, the following selected cash transactions occurred.

Retired equipment that cost $1,212,400 when purchased on December 31, 2005. No salvage value was received.                                                                                                                                                                                                                                                                                                 

Prepare the plant assets section of Navaro’s balance sheet at December 31, 2015. (Hint: You may wish to set up T accounts, post beginning balances, and then post 2015 transactions.) (List Plant Assets in order of Land, Building and Equipment.)

Land

$ 5,196,000

Buildings

$30,050,000

Less: Accumulated depreciation—buildings

20,654,100

9,395,900

Equipment

69,280,000

Less: Accumulated depreciation—equipment

8,660,000

60,620,000

Total plant assets

$75,211,900

Explanation / Answer

Navaro Corporation PLANT ASSETS T ACCOUNTS FOR THE YEAR 2015 LAND A/c Dr. Cr. Date Particulars In $ Date Particulars In $ 01/01/2015 To balance b/d 5196000 01/06/2015 By Cash 1732000 01/04/2014 To Cash 3810400 Note : The profit on sale of land $1039200 trf to Income statement BUILDING A/C Dr. Cr. Date Particulars In $ Date Particulars In $ 01/01/2015 To balance b/d 30050000 ACCUMULATED DEPRECIATION ON BUILDING A/C Dr. Cr. Date Particulars In $ Date Particulars In $ 01/01/2015 01/01/2015 By balance b/d 20654100 EQUIPMENT A/C Dr. Cr. Date Particulars In $ Date Particulars In $ 01/01/2015 To balance b/d 69280000 01/05/2015 By Cash 294440 01/05/2015 By Accumulated Depreciation 744760 31/12/2015 By Accumulated Depreciation 1212400 ACCUMULATED DEPRECIATION ON EQUIPMENT A/C Dr. Cr. Date Particulars In $ Date Particulars In $ 01/05/2015 To Euipment 744760 01/01/2015 By balance b/d 8660000 31/12/2015 To Euipment 1212400 31/12/2015 By Depreciation on fully retired euipment 121240 Calculation of depreciation on Euipment fully retired on 31.12.15 using straight line method Depreciation = Cost - Salvage value / Useful life of asset Depreciation = (1212400-0) / 10 = 121240

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