Problem 9-4 At January 1, 2017, Ivanhoe Company reported the following property,

Question

Problem 9-4 At January 1, 2017, Ivanhoe Company reported the following property, plant, and equipment accounts t 53,850,000 97,600,000 150,750,000 20,350,000 Buildings Equipment Land The company uses straight-line depreciation for buildings and equipment, its year end is December 31, and n makes dyuting endriss uily he bildings are estimated to have s 40-year usefu ife and no salvage value; the equipment is estimated to have& 10-year useful life and no salvage value During 2017, the following selected transactions occurred Ap, 1 Purchased land $440-tu, $1.100 mmoneash and issued a 3rea, 6% note Sayati, os bat-nce May 1 Sold equipment for $330,000 cash. The equpment cost $3.30 milion when onginally purchesed on January , 209 June 1 Sold iend for 94 02 mton Received S750,000 cash and accepted a 3-vear, 5% ly 1 Purchased iment for $2.80 mi cs s1 mition when purchased on December 31,2007, No procsnds were recsive

Explanation / Answer

Journal Entry Date Particulars Dr. Amt. Cr. Amt. 1-Apr-17 Land         4,400,000.00    Cash      1,100,000.00    Notes Payable      3,300,000.00 (To record the purchase of Land) 1-May-17 Depreciation Expense            110,000.00 $3,300,000 / 10 years X (4/12) Accumulated Depreciation - Equipment          110,000.00 (To record the depreciation expense on Equipment sold) 1-May-17 Cash            330,000.00 Accumulated Depreciation - Equipment         2,750,000.00 ($3,300,000 / 10 Years) X 8 Years + $110,000 Loss on Sale of Equipment            220,000.00 $330,000 - ($3,300,000 - $2,750,000)    Equipment      3,300,000.00 (To record the sale of Equipment) 1-Jun-17 Cash            750,000.00 Notes Receivable         3,270,000.00    Land      1,800,000.00    Gain on Sale of Land      2,220,000.00 $4,400,000 - $1,800,000 (To record the sale of Land) 1-Jul-17 Equipment         2,800,000.00    Cash      2,800,000.00 (To record the purchase of equipment) 31-Dec-17 Depreciation Expense            100,000.00 $1,000,000 / 10 Years x`          100,000.00 (To record the depreciation expense on Equipment retired) 31-Dec-17 Accumulated Depreciation - Equipment         1,000,000.00 ($1,100,000 / 10 Years) X 10 Years     Equipment      1,000,000.00 (To record the equipment retired) 31-Dec-17 Depreciation Expense         1,952,000.00 $97,600,000 / 50 Years    Accumulated Depreciation - Buildings      1,952,000.00 (To record the depreciation expense on Buildings) 31-Dec-17 Depreciation Expense      14,785,000.00 Accumulated Depreciation - Equipment    14,785,000.00 (To record the depreciation expense on Equipment) Deprceiation on Equipment = ($150,750,000 - ($3,300,000 + $1,000,000)) / 10 Years Deprceiation on Equipment = $14,645,000 Depreciation on Equipment Purchased = ($2,800,000 / 10 Years) X 6/12 Depreciation on Equipment Purchased = $140,000 Total Depreciation on Equipment = $14,645,000 + $140,000 = $14,785,000

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