Chapter 7 ,7-2 Survey of Accounting 7th addition pg. 280

Problem 7-2 page 286 Name: Calculations: Straight-line method: ( - ) + Double-declining-balance method: Accumulated Depreciation Depreciation Original Cost Expense 2014 2045 2076 - Residual Value Depreciation Expense Straight-Line Method Declining- Balance Method Year 2044 20YS 2016 2017 Total 220 Chapter 7 Fixed Assets and Intang Problems V ents, and Obj 1 an aster Allocate payments and receipts to fixed asset accounts acquired payments and receipes are related to land, land improvements wholesale apparel business. The receipts are identified Land $470,250 12.500 14,500 100.000 31,750 P7-1 Allocate payments a The following payments an acquired for use in a wholesale appare Architects and engineer's fees for plans and supernon Cost of filing and grading land.... Cost of removing building purchased with land in fel d. Cost of paving parking lot to be used by customers e cost of real estate acquired as a plant uite:Land (5375.000 and Building (525.000)... Cost of repairing windstorm damage during construction 9. Cost of repairing vandalism damage during construction h. Cost of trees and shrubbery planted... .. Delinquent real estate taxes on property, assumed by purch Fee paid to attorney for title search... k Finder's fee paid to real estate agency. ***** Interest incurred on building loan during construction m. Money borrowed to pay building contractor... n Payment to building contractor for new building. ** Proceeds from insurance company for windstorm and vandalism damage Premium on one year Insurance policy during construction. 9. Proceeds from sale of salvage materials from old building.. Refund of premium on insurance policy ipl canceled after 10 months Special assessment paid to city for extension of water main to the property. 40.000 775.000 800.000 4.500 6.000 6,500 1.000 9.000 Instructions 1. Assign each payment and receipt to land (unlimited life), Land Improvements (limited Building, or Other Accounts. Indicate receipts by an asterisk. Identify each item bu and list the amounts in columnar form, as follows: Other Accounts Land improvements Land Item Building 2. Determine the increases to Land, Land Improvements, and Building. 3. The costs assigned to the land, which is used as a plant site, will not be depreciated while the costs assigned to land improvements will be depreciated. Explain this seemingly contradictory application of the concept of depreciation. P7-2 Compare three depreciation methods Bayside Coatings Company purchased waterproofing equipment on January 2, 2014, for $190,000. The equipment was expected to have a useful life of four years and a residual value of $9,000 Instructions Determine the amount of depreciation expense for the years ended December 31, 2044 2045, 2076, and 2077, by (a) the straight-line method and (b) the double-declining balance method. Also determine the total depreciation expense for the four years by each method. The following columnar headings are surrested for recording the depreciation expense amounts: Depreciation Expense Double-Declining-Balance Method Straight-Line Method Year The predictio dicas Exceptes wable on the student companion site