Moreau Lock \& Key Ltd. has a hefty investment in security equipment, as reported in the company's balance sheet at December 31, 2019:

In early October 2020, Moreau Lock \& Key purchased additional security equipment at a cost of \(\$ 80,000\). The company depreciates buildings by the straight-line method over 20 years with a residual value of \(\$ 70,000\). Due to obsolescence, security equipment has a useful life of only eight years and is being depreciated by the double-diminishing-balance method with zero residual value {Requirements}
1. How will Moreau Lock \& Key's equipment purchase be recorded? What will the 2020 depreciation expense be? Why is land not depreciated?
2. Report property, plant, and equipment on the company's December 31, 2020, balance sheet.

Transcribed Image Text:

Property, plant, and equipment, at cost: Land. Buildings Less Accumulated depreciation.... Security equipment Less Accumulated depreciation..... $ 200,000 310,000 (40,000) 620,000 (370,000)