Question
Item 1: Entity A incurred the following plant asset expenditures in during the year. 1. Real estate purchased as plant site (seller valued land at
Item 1: Entity A incurred the following plant asset expenditures in during the year.
1. Real estate purchased as plant site
(seller valued land at $190,000 and building $200,000) $390,000
2. Accrued real estate taxes (owed by seller) paid at time
of purchase of real estate 6,000
3. Cost of demolition of building to make land suitable for
construction of new building 33,500
4. Cost of filling and grading the land 47,000
5. Excavation (foundation) costs for new building 21,900
6. Architects fees on new building plans 44,000
7. Full payment to building contractor 1,452,200
8. Cost of lighting and paving a parking lot 87,800
9. Proceeds from salvage of demolished building 12,700
List the items and amounts that make up the Land account. Be sure to provide a total.
Item 2: Equipment with a cost of $238,400 has an estimated salvage value of $43,600 and an estimated life of 5 years. Compute the annual depreciation and then show what this asset looks like on the balance sheet at the end of the second year (prepare a partial classified balance sheet). Show your work.
Item 3: Equipment that cost $250,000 and on which $182,000 of accumulated depreciation has been recorded was disposed of for $35,000 cash. Make the entry to record this transaction. Hint: Compute BV and then gain (loss).
Item 4: Entity B bought equipment for $500,000 on January 1, 2021. It estimated the useful life to be 10 years with no salvage value, and the straight-line method of depreciation was used. On January 1, 2022, Entity B decides that it will use the equipment for a total of 6 years. Compute the revised depreciation expense for 2022 and make the entry to record depreciation expense. Show work.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started