ACCT 2110

CE #4 (ch. 9)

Due: Thursday, 11/4 by 11 pm (submit through Assignments tab on Learn)

Item 1: Entity A purchased land adjacent to its plant to improve access for trucks making deliveries. Expenditures incurred in purchasing the land were as follows: Purchase price $75,000

Brokers fees 1,700

Title search and survey 5,000

Demolition of an old building on the property 5,700

Grading 1,200

Digging foundation for the road 3,000

Laying and paving driveway 25,000

Lighting 7,500

Signs 1,500.

Proceeds from the salvage of the demolished building were $1,000.

List the items and amounts that make up the Land account. Be sure to provide a total.

Item 2: Equipment with a cost of $340,000 has an estimated salvage value of $20,000 and an estimated life of 4 years. Compute the annual depreciation and then show what this asset looks like on the balance sheet at the end of the second year.

Item 3: Equipment that cost $72,000 and on which $60,000 of accumulated depreciation has been recorded was disposed of for $9,000 cash. Make the entry to record this transaction. Hint: Compute BV and then gain (loss).

Item 4: Entity B bought equipment for $240,000 on January 1, 2021. It estimated the useful life to be 3 years with no salvage value, and the straight-line method of depreciation was used. On January 1, 2022, Entity B decides that it will use the equipment for a total of 5 years. Compute the revised depreciation expense for 2022 and make the entry to record depreciation expense.