Problems: Series A OBJ. 1 Land, $400,000 PR 10-1A Allocating payments and receipts to fixed asset accounts The following payments and receipts are related to land, land improvements, and buildings acquired for use in a wholesale ceramic business. The receipts are identified by an asterisk. $ a. Fee paid to attorney for title search b. Cost of real estate acquired as a plant site:Land... Building (to be demolished). c. Delinquent real estate taxes on property, assumed by purchaser. d. Cost of tearing down and removing building acquired in (b)..... e. Proceeds from sale of salvage materials from old building. f. Special assessment paid to city for extension of water main to the property. 9. Architect's and engineer's fees for plans and supervision h. Premium on one-year insurance policy during construction. 1. Cost of filling and grading land .. 1. Money borrowed to pay building contractor.. k Cost of repairing windstorm damage during construction 1 Cost of paving parking lot to be used by customers m. Cost of trees and shrubbery planted n. Cost of floodlights installed on parking lot. o. Cost of repairing vandalism damage during construction p. Proceeds from insurance company for windstorm and vandalism damage 4. Payment to building contractor for new building.... 1. Interest incurred on building loan during construction 5. Refund of premium on insurance policy (h) canceled after 11 months 2,500 285,000 55,000 15,500 5,000 4,000 29,000 60,000 6,000 12,000 900,000 5,500 32,000 11,000 2,000 2,500 7,500 800,000 34,500 500 (Continued) Copyright 2018 Cange Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02.200-201 I Instructions 1. Assign each payment and receipt to Land (unlimited life), Land Improvements (limited life), Building, or Other Accounts. Indicate receipts by an asterisk. Identify each item by letter and list the amounts in columnar form, as follows: Land Other Item Land Improvements Building Accounts 2. Determine the amount debited to Land, Land Improvements, and Building. 3. The costs assigned to the land, which is used as a plant site, will not be de- preciated, while the costs assigned to land improvements will be depreciated. Explain this seemingly contradictory application of the concept of depreciation. 4. What would be the effect on the current year's income statement and balance sheet if the cost of filling and grading land of $12,000 Ipayment (1) was incorrectly clas- sified as Land Improvements rather than Land? Assume that Land Improvements are depreciated over a 20-year life using the double-declining balance method. 1. a. Year 1: straight line depreciation $22,500 Excel PR 10-2A Comparing three depreciation methods OBJ. 2 Dexter Industries purchased packaging equipment on January 8 for $72,000. The equip- ment was expected to have a useful life of three years, or 18,000 operating hours, and a residual value of $4,500. The equipment was used for 7,600 hours during Year 1, 6,000 hours in Year 2, and 4,400 hours in Year 3. Instructions 1. Determine the amount of depreciation expense for the three years ending December 31 by (a) the straight-line method, (b) the units of activity method, and (c) the double- declining-balance method. Also determine the total depreciation expense for the three years by each method. The following columnar headings are suggested for recording the depreciation expense amounts: Depreciation Expense Straight- Double-Declining Line Activity Balance Year Method Method Method Show Me How Units-of- 2. What method yields the highest depreciation expense for Year 1? 3. What method yields tile most depreciation over the three-year life of the equipment? a. Year 1: $65,250 PR 10-3A Depreciation by three methods; partial years OBJ. 2 Perdue Company purchased equipment on April 1 for $270,000. The equipment was expected to have a useful life of three years, or 18,000 operating hours, and a residual value of $9,000. The equipment was used for 7.500 hours during Year 1, 5,500 hours in Year 2, 4,000 X 1. a. Year 1: straight- line depreciation $22,500 Excel PR 10-2A comparing three depreciation methods OBJ. 2 Dexter Industries purchased packaging equipment on January 8 for $72,000. The equip ment was expected to have a useful life of three years, or 18,000 operating hours, and a residual value of $4,500. The equipment was used for 7,600 hours during Year 1, 6,000 hours in Year 2, and 4,400 hours in Year 3 Instructions 1. Determine the amount of depreciation expense for the three years ending December 31 by (a) the straight line method, (b) the units of activity method, and the double- declining-balance method. Also determine the total depreciation expense for the three years by each method. The following columnar headings are suggested for recording the depreciation expense amounts: Depreciation Expense Straight Units-of- Double-Declining Line Activity Balance Year Method Method Method Show Me How 2. What method yields the highest depreciation expense for Year 1? 3. What method yields the most depreciation over the three-year life of the equipment? OB), 2 Va Year 1: $65.250 Excel PR 10-3A Depreciation by three methods: partial years Perdue Company purchased equipment on April 1 for $270,000. The equipment was expected to have a useful life of three years, or 18,000 operating hours, and a residual value of $9,000. The equipment was used for 7,500 hours during Year 1, 5,500 hours in Year 2, 4,000 hours in Year 3, and 1,000 hours in Year 4 Instructions Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2 Year 3, and Year 4 by (a) the straight-line method, (b) the units of activity method, and (c) the double-declining balance method. 1.b. Year 1:5320,000 depreciation expense PR 10-4A Depreciation by two methods, sale of fixed asset OBJ. 2,3 New lithographic equipment, acquired at a cost of $800,000 on March 1 of Year 1 (begin ning of the fiscal year), has an estimated useful life of five years and an estimated residual value of $90,000. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year, On March 4 of Year 5, the equipment was sold for $135,000. General Ledger Excel Cor 2016 Liste May not be copied, canner duplicated in pat WON 2020 Depreciation Expense a. b. Straight- Units-of- Line Activity C. Double-Declining- Balance Year Year 1 Year 2 Year 3 Totals Calculations: Straight-line method: (Cost Residual Value) Years Yearly Depreciation Units-of-activity method: (Cost Residual Value) Total Hours Rate Rate Hours Yearly Depreciation Year 1 Year 2 Year 3 Yearly Depreciation Double-declining-balance method: Depreciable Balance Rate Year 1 Year 2 Since depreciation cannot cause book value to fall below residual value: Depreciable Balance Residual Value Year 3 Yearly Depreciation D 00 E G . J K Year 3 Yearly Depreciation Double-declining balance method: Depreciable Balance Rate Year 1 Year 2 Since depreciation cannot cause book value to fall below residual value: Depreciable Balance Residual Value Year 3 Yearly Depreciation The method that yields the most depreciation expense in Year 1 is the 3. The method that yields the most total depreciation over the three years is the