9 on udIdings Machinery and equipment 250,000 167,008 06,0 95,325 03,000 25 year
ID: 2601375 • Letter: 9
Question
9 on udIdings Machinery and equipment 250,000 167,008 06,0 95,325 03,000 25 years. Straight ine: 10 years 150% declining balance, 5 years, all acquired after 2014 beferences Land improvements Straight line Depreciation is computed to the nearest morth and residual values are immaterial. Transactions during 2018 and other information a On Janusary 6, 2018, a plant faciny comsting o of land and building was acquired from King Corp in exchange for 20,000 shares of Cord's common stock On this date, Cord's stock had a fair value of $50 a share. Current assessed values of land and building for are $175.000 and $525,000 b. On March 25,2018, new parking c The lots, streets, and sidewalks at the acquired plant facklity were completed at a total cost of $162000. ted useful lite of 12 years had an lease, which would terminate on December 31, 2020, was d. On July 1, 2018 on December 31, 2014, and had an estimated useful lIife of eight years. The reiated e for an addtional four-year term. On April 30 2018, Cord were purchased at a total invoice cost of $320,000. Addisional costs of $10,000 for and equipment delivery and $45,000 for installation e On August 30, were incurred t On September 30, 2018, a truck with a cost of $23.500 and a book value of $8.200 on date of sale was sold for $11,000 2018, Cord purchased a new automobile for $12,000 g on December 20, 2018, a machine with a cost of S14 500 and a book value of $2.850 at date of dispostion was scrapped withouat cash recovery 1. Prepare a schedule analyzing the changes in each of the plant asset accounts during 2018. Do not analyze changes in accumulated 2. For each asset category, prepare a schedule showing depreciation or amortization expense for the year ended December 3t 2018 Type here toExplanation / Answer
Requirement 1
CORD COMPANY
Analysis of Changes in Plant Assets
For the Year Ending December 31, 2018
Balance Balance
12/31/12 Increase Decrease 12/31/13
Land $ 170,000 $ 250,000 [1] $ -- $ 420,000
Land improvements -- 162,000 -- 162,000
Buildings 1,250,000 750,000 [1] -- 2,000,000
Machinery and equipment 875,000 375,000 [2] 14,500 1,235,500
Automobiles and trucks 167,000 12,000 23,500 155,500
Leasehold improvements 206,000 -- -- 206,000
$2,668,000 $1,549,000 $38,000 $4,179,000
Requirement 2
CORD COMPANY
Depreciation and Amortization Expense
For the Year Ended December 31, 2018
Land Improvements:
Cost $162,000
Straight-line rate (1 ÷ 12 years) x 8 1/3%
Annual depreciation 13,500
Depreciation on land improvements for 2018:
(3/25 to 12/31/18) x 3/4 $ 10,125
Buildings:
Book value, 1/1/18 ($1,250,000 – 323,900) $926,100
Building acquired 1/6/18 750,000
Total amount subject to depreciation 1,676,100
150% declining balance rate:
(1 ÷ 25 years = 4% x 1.5) x 6% $ 100,566
Machinery and equipment:
Balance, 1/1/18 $1,250,000
Straight-line rate (1 ÷ 10 years) x 10% 125,000
Purchased on 7/1/18 375,000
Depreciation for one-half year x 5% 18,750
Depreciation on machinery and equipment for 2018 $ 143,750
Automobiles and trucks:
Book value, 1/1/18 ($167,000 – 95,325) $71,675
Deduct 1/1/18 book value of truck sold
on 9/30 ($8,200 + 1,845) (10,045)
Amount subject to depreciation 61,630
150% declining balance rate:
(1 ÷ 5 years = 20% x 1.5) x 30% 18,489
Automobile purchased 8/30/18 12,000
Depreciation for 2018 (30% x 4/12) x 10% 1,200
Truck sold on 9/30/18 – depreciation (given) 1,845
Depreciation on automobiles and trucks $ 21,534
Leasehold improvements:
Book value, 1/1/18 ($206,000 – 108,000) $98,000
Amortization period (1/1/13 to 12/31/17) ÷ 5 years
Amortization of leasehold improvements for 2018 $ 19,600
Total depreciation and amortization expense for 2018 $295,575
Explanations of Amounts:
[1] Plant facility acquired from King 1/6/13—allocation to Land and Building:
Fair value—20,000 shares of Cord common
stock at $50 per share fair value $1,000,000
Allocation in proportion to appraised values at date of exchange:
% of
Amount Total
Land $175,000 25
Building 525,000 75
$700,000 100
Land $1,000,000 x 25% = $ 250,000
Building $1,000,000 x 75% = 750,000
$1,000,000
[2] Machinery and equipment purchased 7/1/18:
Invoice cost $320,000
Delivery cost 10,000
Installation cost 45,000
Total acquisition cost $375,000
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