Question
At December 31, 2019, Novak Enterprises reported the following as plant assets. Land 3,710,000 Buildings 27,420,000 Less: Accumulated depreciation-buildings 13,940,000 13,480,000 Equipment 47,200,000 Less: Accumulated
At December 31, 2019, Novak Enterprises reported the following as plant assets.
Land |
| 3,710,000 |
Buildings | 27,420,000 |
|
Less: Accumulated depreciation-buildings | 13,940,000 | 13,480,000 |
Equipment | 47,200,000 |
|
Less: Accumulated depreciation-equipment | 4,820,000 | 42,380,000 |
Total plant assets |
| 59,570,000 |
During 2020, the following selected cash transactions occurred.
April 1 | Purchased land for 2,030,000. |
May 1 | Sold equipment that cost 960,000 when purchased on January 1, 2016. The equipment was sold for 596,480. |
June 1 | Sold land purchased on June 1, 2010 for 1,500,000. The land cost 397,000. |
July 1 | Purchased equipment for 2,510,000. |
Dec. 31 | Retired equipment that cost 503,000 when purchased on December 31, 2010. No residual value was received. |
1-Journalize the above transactions. The company uses straight-line depreciation for buildings and equipment. The buildings are estimated to have a 50-year life and no residual value. The equipment is estimated to have a 10-year useful life and no residual value. Update depreciation on assets disposed of at the time of sale or retirement.
2-Record adjusting entries for depreciation for 2020.
3-Prepare the plant assets section of Novaks statement of financial position at December 31, 2020.
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