Barrie Trucking Company (BTC) was privately incorporated in 1985 andservices the Greater Toronto Area and the Highway 11 corridor in Ontario. BTC is in the "less than load" business, making its money by filling the trucks with several smaller loads and delivering them to and from Toronto.

Recently, the financial controller for BTC retired, leaving the owner, Klaus Bauer, looking for a new one. After several months of interviews, Klaus made an offer to you for the position and with a hefty pay raise and substantial benefits, you accepted. This is your first week on the job, it is now December 31, and you need to make all of the property, plant, and equipment journal entries today that haven't been done as of yet. BTC's year end is December 31.

The following events require your attention:

On July 1, BTC purchased land south west of Toronto that has the potential to be another loading terminal. In addition to the land, the purchase also included two transport trailers and one cube van. The total purchase price was $5.6 million and was paid 40% in cash and the balance as a five year loan. The loan carries an interest rate of prime plus 2% with equal annual principal payments (every July 1). Interest is also paid annually on July 1. Appraisers have valued the land at $6 million, the two transport trailers at $220,000 each, and the cube van at $110,000. Although the transaction has taken place and possession has transferred, no entry has been made. The expected useful life of the trailers and the van are estimated at six years each. BTC depreciates its trailers on a straight-line basis. Residual value is estimated at $10,000 for each trailer and zero for the van.

On August 1, BTC sold one of its buildings in Northern Ontario for $600,000. The building origi nally cost BTC $250,000 and had accumulated depreciation of $118,000 at the time of the sale. Depreciation of $15,000 that had accumulated up to August 1 had not been recorded in the books. The proceeds were received in cash.

On January 1, the previous controller determined that trucks with a cost of $575,000 and accumu lated depreciation of $115,000 would actually have an estimated useful life of eight more years with no residual. The previous estimated useful life had been 10 years, with two years having already passed (so the useful life of nine years is from January 1 and beyond).

A customer list from ABC Transport was purchased by BTC on September 1 for $75,000 cash. It is expected that the list will generate revenues for the next six years.

BTC has internally developed a strong customer list of its own. The owner, Klaus, has stated that this list is worth about $220,000 if sold.

A warehouse terminal and land in the Muskokas was purchased on November 1 for $750,000 cash. The land is valued at $600,000 and the terminal at $150,000. BTC depreciates terminals at 6% per year using the declining-balance method.

BTC has an administrative building just west of Ottawa that is recorded on its books at $800,000. The building was purchased five years ago and has been depreciated over 20 years. On December 31, it was determined that there was a major soil issue around the building, which will make it difficult to sell. It is estimated that the building's fair value and value in use is now 30% of its original cost, with an estimated $40,000 in costs to sell

Additional information:

BTC records its depreciation to the nearest month. In other words, an asset purchased October 1 would have its depreciation prorated (3/12ths).

No entries have been made to reflect any of the transactions above. Prime is currently at 2%.

Required

Prepare journal entrieswith supporting documentation, for the issues above. State any assumptions that you make.