FACTS: Bronson Corporation operates several factories that manufacture equipment for the restaurant industry. Due to expanding operations, the company purchased an additional factory in early January 20Y5.

The cash purchase price of $7.5M included 6 acres of land and an existing building. According to independent appraisals at the time of purchase, the fair value of the building was $6.4M and the fair value of the land was $1.6M.

Bronson will depreciate the building over 30 years using the straight-line method. Estimated salvage value is $420,000.

Cash paid for general building maintenance during the first three years is as follows: $60,000 during 20Y5, $64,000 during 20Y6, and $72,000 during 20Y7.

In early January 20Y6, Bronson spent $1,247,000 on factory renovations to make future operations more efficient.

In early January 20Y7, Bronson's auditors suggested that the book value of the factory building might be impaired due to an unexpected decline in the demand for products manufactured at the factory. Management estimated that net future cash flows over the factory's remaining useful life would be approximately $6.2M. An updated independent appraisal showed that the factory's fair value had declined to $5,672,000. Bronson decided to continue to use the factory rather than sell it and as a result, revised the factory's estimated salvage value to $240,000.

REQUIRED:

1.Record the entries related to the above transactions from 20Y5 to 20Y7. Use the t-accounts on page 2.

2.Show the impacts of the above transactions on Bronson's financial statements for 20Y5 to 20Y7. Use the templates on page 3. Check figures have been provided. Net the Factory Building and Accumulated Depreciation accounts.

IMPACT ON CURRENT PERIOD CASH FLOW

20Y5

20Y6

20Y7

For Property, Plant, or Equipment

Net Impact on Current Period Cash Flow

IMPACT ON CURRENT PERIOD EARNINGS

20Y5

20Y6

20Y7

Net Impact on Current Period Earnings

CUMULATIVE IMPACT ON BALANCE SHEET ELEMENTS

ASSETS:

20Y5

20Y6

20Y7

Cumulative Change in Assets

($246,000)

($539,000)

($1,965,000)

LIABILITIES + EQUITY:

Cumulative Change in Liabilities + Equity

ASSETS

=

LIABILITIES

+

EQUITY

+

-

-

+

-

+

Cash

Factory Building

Accumulated Depreciation

FACTS: Bronson Corporation operates several factories that manufacture equipment for the restaurant industry. Due to expanding operations, the company purchased an additional factory in early January 20Y5.

The cash purchase price of $7.5M included 6 acres of land and an existing building. According to independent appraisals at the time of purchase, the fair value of the building was $6.4M and the fair value of the land was $1.6M.

Bronson will depreciate the building over 30 years using the straight-line method. Estimated salvage value is $420,000.

Cash paid for general building maintenance during the first three years is as follows: $60,000 during 20Y5, $64,000 during 20Y6, and $72,000 during 20Y7.

In early January 20Y6, Bronson spent $1,247,000 on factory renovations to make future operations more efficient.

In early January 20Y7, Bronson's auditors suggested that the book value of the factory building might be impaired due to an unexpected decline in the demand for products manufactured at the factory. Management estimated that net future cash flows over the factory's remaining useful life would be approximately $6.2M. An updated independent appraisal showed that the factory's fair value had declined to $5,672,000. Bronson decided to continue to use the factory rather than sell it and as a result, revised the factory's estimated salvage value to $240,000.

REQUIRED:

1.Record the entries related to the above transactions from 20Y5 to 20Y7. Use the t-accounts on page 2.

2.Show the impacts of the above transactions on Bronson's financial statements for 20Y5 to 20Y7. Use the templates on page 3. Check figures have been provided. Net the Factory Building and Accumulated Depreciation accounts.

IMPACT ON CURRENT PERIOD CASH FLOW

20Y5

20Y6

20Y7

For Property, Plant, or Equipment

Net Impact on Current Period Cash Flow

IMPACT ON CURRENT PERIOD EARNINGS

20Y5

20Y6

20Y7

Net Impact on Current Period Earnings

CUMULATIVE IMPACT ON BALANCE SHEET ELEMENTS

ASSETS:

20Y5

20Y6

20Y7

Cumulative Change in Assets

($246,000)

($539,000)

($1,965,000)

LIABILITIES + EQUITY:

Cumulative Change in Liabilities + Equity

ASSETS

=

LIABILITIES

+

EQUITY

+

-

-

+

-

+

Cash

Factory Building

Accumulated Depreciation