ACCT 2110 Ch 9: CE #4

Item 1: Entity A purchased land to construct a car wash and incurred costs.

Land purchase price $80,000

Accrued property taxes 2,200

Brokers fees 2,000

Title search and survey 3,000

Demolition of an old building on the land 6,500

Full payment to the contractor constructing

the car wash 250,000

Signs for the car wash 3,500

Lighting 1,000

Annual insurance for the car wash 6,000

Proceeds from the salvage of the demolished building were $2,000.

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

Item 2: Equipment with a cost of $400,000 has an estimated salvage value of $50,000 and an estimated life of 5 years. Compute the annual depreciation and then show what this asset looks like on a classified balance sheet at the end of the second year.

Item 3: Equipment that cost $90,000 and on which $85,000 of accumulated depreciation has been recorded was disposed of for $11,000 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.