Question 2 At January 1, 2018, Crane Limited reported the following property, plant, and equipment accounts: Accumulated depreciation-buildings Accumulated depreciation-equipment Buildings Equipment Land $62,800,000 52,600,000 89,700,000 162,600,000 18,100,000 The company uses straight-line depreciation for buildings and equipment, its year end is December 31, and it makes adjusting entries annually. The buildings are estimated to have a 40-year useful life and no residual value; the equipment is estimated to have a 10-year useful life and no residual value. During 2018, the following selected transactions occurred: Apr. 1 Purchased land for $4,830,000. Paid $1,010,000 cash and issued a three-year, 6% mortgage payable for the balance. Interest on the mortgage is payable annually each April 1. May 1 Sold equipment for $300,000 cash. The equipment cost $2,699,400 when originally purchased on January 1, 2010. June 1 Sold land for $3,525,800. Received $831,800 cash and accepted a three-year, 5% note for the balance. The land cost $1,300,000 when purchased on June 1, 2012. Interest on the note is due annually each June 1. July 1 Purchased equipment for $2,300,000 cash. Dec. 31 Retired equipment that cost $1,100,000 when purchased on January 1, 2009. No proceeds were received. 31 Tested land for impairment and found that its recoverable value was $18,100,000. Record the above transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit Apr. 1 Land 4830000 Cash 1010000 Mortgage Payable 3820000 May 1 Depreciation Expense Accumulated Depreciation - Equipment (To record depreciation expense) May 1 Cash 300000 Accumulated Depreciation - Equipment Loss on Disposal Equipment 2699400 (To record loss/gain on sale of equipment) June 1 Cash Notes Receivable June 1 Cash Notes Receivable Land Gain on Disposal (To record loss/gain on sale of land) July 1 Equipment 2300000 Cash 2300000 Dec. 31 Depreciation Expense Accumulated Depreciation - Equipment (To record depreciation expense) Dec. 31 Accumulated Depreciation - Equipment Equipment (To record the retirement of equipment) Dec. 31 Impairment Loss Land (To record impairment loss) Record any adjusting entries required at December 31. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Round answers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit Dec. 31 Depreciation Expense Accumulated Depreciation - Buildings (To record depreciation expense on buildings) Dec. 31 Depreciation Expense Accumulated Depreciation - Equipment (To record depreciation expense on equipment) Dec. 31 Interest Expense Interest Payable (To record interest expense) Dec. 31 Interest Receivable Interest Revenue (To record interest revenue) Prepare the property, plant, and equipment section of the company's statement of financial position at December 31. (List Property, plant and Equipment in order of Land, Building and Equipment.) CRANE LIMITED Statement of Financial Position (Partial) December 31, 2018 Assets Property, plant, and Equipment Land Buildings Less A. Accumulated Depreciation - Buildings Equipment Less A. Accumulated Depreciation - Equipment Total Property, plant, and Equipment
