Problem 11-3 Depreciation methods; partial periods Chapters 10 and 11 [LO11-2]

The plant asset and accumulated depreciation accounts of Pell Corporation had the following balances at December 31, 2017:

	Plant Asset				Accumulated Depreciation
Land	$	365,000			$	0
Land improvements		184,500				48,000
Building		1,530,000				365,000
Machinery and equipment		1,188,000				420,000
Automobiles		153,000				113,500

Transactions during 2018 were as follows:

On January 2, 2018, machinery and equipment were purchased at a total invoice cost of $275,000, which included a $5,800 charge for freight. Installation costs of $30,000 were incurred.

On March 31, 2018, a small storage building was donated to the company. The person donating the building originally purchased it three years ago for $28,000. The fair value of the building on the day of the donation was $18,200.

On May 1, 2018, expenditures of $53,000 were made to repave parking lots at Pell's plant location. The work was necessitated by damage caused by severe winter weather.

On November 1, 2018, Pell acquired a tract of land with an existing building in exchange for 10,000 shares of Pells common stock that had a market price of $41 per share. Pell paid legal fees and title insurance totaling $24,500. Shortly after acquisition, the building was razed at a cost of $38,000 in anticipation of new building construction in 2019.

On December 31, 2018, Pell purchased a small storage building by giving $16,000 cash and an old automobile purchased for $19,500 on January 1, 2017. Depreciation on the old automobile recorded through December 31, 2018, totaled $14,625. The fair value of the old automobile was $3,900.

Required:

For each asset classification, prepare a schedule showing depreciation for the year ended December 31, 2018, using the following depreciation methods and useful lives: Land improvementsStraight line; 15 years. Building150% declining balance; 20 years. Machinery and equipmentStraight line; 10 years. Automobiles150% declining balance; 3 years.