Carla Vista Machining purchased the assets of an existing business on June 30, 2020. It immediately started operations and has a calendar year end. The trial balance of Carla Vista Machining at December 31, 2021 shows the following:

Land		$43,000
Building		242,000
Accumulated depreciation building		25,800
Equipment		128,000
Accumulated depreciation equipment		44,000
Land improvements		22,000
Accumulated depreciation land improvements		4,703

The accounting policies chosen for the property, plant, and equipment assets and the relevant information concerning the calculation of depreciation follows.

Building		Straight-line
Equipment		Diminishing balance - 25%
Land improvements		Diminishing balance - 15% rate
Residual value - Building		$70,000
Residual value - Equipment		10%		of cost
Residual value - Land Improvements		0
Useful life - Building		10		Years
Useful life - Equipment		8		Years
Useful life - Land Improvements		5		Years

Events and transactions for 2022 follow.

1.		On January 4, 2022, Carla Vista replaced a motors on one of the larger pieces of equipment at a cost of $15,000. The cost of the old motor removed could not be determined. The replacement motor will operate using half of the electricity that was consumed by the old motor. The useful life and the residual value of all of the equipment did not change as a result of this addition.
2.		On May 1, 2022, after unusual spring flooding, Carla Vista had to replace the parking lot, which was the only item in the land improvements account. The cost to replace was $34,000. The new parking lot is expected to have a useful life of 10 years, with no residual value.

(a)

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• Correct Answer

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Record the transactions that occurred during 2022. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 4, 2022
May 1, 2022
	(To record depreciation expense)
May 1, 2022
	(To record retirement of land improvement)
May 1, 2022
	(To record costs to resurface)

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Solution

List of Accounts

Attempts: 3 of 3 used

(b)

Calculate the depreciation expense for Carla Vista Machining on December 31, 2022. (Assume that the diminishing balance rates will remain the same) (Round answers to 0 decimal places, e.g. 5,275.)

		Depreciation expense
Building		$
Equipment		$
Land Improvements		$

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List of Accounts

Attempts: 0 of 3 used