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Please see attached question with supporting calculations, thank you! The accompanying analyses of the Property, Plant, and Equipment and related Accumulated Depreciation accounts have been
Please see attached question with supporting calculations, thank you!
The accompanying analyses of the Property, Plant, and Equipment and related Accumulated Depreciation accounts have been prepared by the chief accountant of the Namtip. You have traced the beginning balances to your prior year's audit working papers. Namtip Ltd. Analyses of Property, Plant, and Equipment and Related Accumulated Depreciation Accounts For the Year Ending December 31, 2015 Assets Land Buildings Machinery and Equipment Total Accumulated Depreciation Buildings Machinery and Equipment Total Per Ledger 12/31/14 422,500 120,000 385,000 927,500 Additions 5,000 17,500 40,400 62,900 60,000 173,250 233,250 5,150 39,220 44,370 26,000 26,000 Per Ledger 12/31/15 427,000 137,500 399,400 964,400 0 0 65,150 212,470 277,620 Retirements All plant assets are depreciated on the straight-line basis (no residual value taken into consideration) based on the following estimated service lives: building, 25 years; and all other items, 10 years. The company's policy is to take one half-year's depreciation on all asset additions and disposals during the year. Your audit revealed the following information: 1. On April 1, the company entered into a 10-year lease contract for a die casting machine, with annual payments of $5,000 payable in advance every April 1. The lease is cancelable by either party (60 days' written notice is required), and there is no option to renew the lease or buy the equipment at the end of the lease. The estimated service life of the machine is 20 years with no residual value. The company recorded the die casting machine in the Machinery and Equipment account at $40,400, the present value at the date of the lease, and $2,020 applicable to the machine has been included in depreciation expense for the year. 2. The company completed the construction of a wing on the plant building on June 30. The service life of the building was not extended by this addition. The lowest construction bid received was $17,500, the amount recorded in the Buildings account. Company personnel constructed the addition at a cost of $16,000 (materials, $7,500; labor, $5,500; and overhead, $3,000). 3. On August 18, $5,000 was paid for paving and fencing a portion of land owned by the company and used as a parking lot for employees. The expenditure was charged to the Land account. 4. The amount shown in the machinery and equipment asset retirement column represents cash received on September 5 upon disposal of a machine purchased in July 2011 for $48,000. The chief accountant recorded depreciation expense of $3,500 on this machine in 2015. 5. Harbor City donated land and a building appraised at $100,000 and $400,000, respectively, to Namtip, Ltd. for a plant. On September 1, the company began operating the plant. Since no costs were involved, the chief accountant made no entry for the above transaction. Prepare the adjusting journal entries, in proper form, that you would propose at December 31, 2015, to adjust the accounts for each the above transactions (1-5). Disregard income tax implications. The accounts have not been closed. Computations should be rounded off to the nearest dollar. If no adjusting journal entry is necessary, you should write NO ADJUSTING ENTRY NEEDED in the appropriate space. Show supporting calculations as necessaryStep by Step Solution
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