CASE STUDY (answer asap)

SECTION 1- Capital assests

SECTION 2- Current and Long-term liabilities

SECTION 3- Shareholder's Equity

SECTION 4- Analysis

ACCT1115 Case Study Heavy Equipment and Machinery Inc. (HEMI) Capital Assets 1. HEMI purchased land and a building for $360,000,000 on September 1, 2023. The land was appraised at $100,000,000, and the building was appraised at 300,000,000 for insurance purposes. Management estimates the building's residual value to be $20,000,000 at the end of its useful life of 20 years. HEMI's accountant wants you to: a. Calculate the cost of land and building in HEMI's accounting records (2 marks). b. If HEMI paid cash of $210,000,000 and borrowed $150,000,000 (Mortgage Payable) to purchase the land and building, provide the September 1 journal entry to record the purchase of land and building (4 marks). c. Calculate the building depreciation expense using the straight-line depreciation method that should be reported in the Statement of Income for the year ended October 31, 2023 (2 marks). d. Provide an October 31, 2023, adjusting journal entry to record the depreciation expense on the building and explain why you credited the contra-asset account rather than the asset account (2 marks). 2. On September 1, 2023 HEMI paid $10,000,000 for equipment used to crate (package) its inventory for shipping. This amount is recorded in the Equipment general ledger account. The equipment is expected to be useful for 500,000 crates (packages). The equipment will have no residual or salvage value at the end of its useful life. a. Complete the yearly depreciation expense in the following table based on the units of production (2 marks): Year-ended Units Depreciation expense $ October 31, 2023 (actual production) 50,000 October 31, 2024 (estimated production) 300,000 October 31, 2025 (estimated production) 150,000 Total 500,000 b. Explain why the Equipment depreciation expense for the year ended October 31, 2023, in the above table does not need to be prorated for 2 months. Also, what would be the annual depreciation rate for the double-diminishing-balance method? (2 marks)