Question
Tesla's PP&E as of the beginning of 2021 is summarized below: Assets Acquisition Date Cost Residual Depreciation Method Useful life Truck 1/1/2018 $100,000 $20,000 Straight-line
Tesla's PP&E as of the beginning of 2021 is summarized below:
Assets | Acquisition Date | Cost | Residual | Depreciation Method | Useful life |
Truck | 1/1/2018 | $100,000 | $20,000 | Straight-line | 7 |
Solar Energy Systems | 1/1/2019 | $8,000,000 | $100,000 | Straight-line | 10 |
GigaFactory | 1/1/2020 | $10,000,000 | $1,000,000 | Double-declining | 20 |
Teslas 2021 transactions with regard to PP&E are as follow:
(Jan 1, 2021) Purchased a bundle of Building and Machinery, for $1,200,000 in cash. The stand-alone fair values of those assets are $1,000,000 and $600,000, respectively. Details for setting up depreciation schedules for Building and Machinery are summarized below:
Assets | Acquisition Date | Cost | Residual | Depreciation Method | Useful life |
Building | 1/1/2021 | ? | $100,000 | Sum-of-the years-digits | 15 |
Machinery | 1/1/2021 | ? | $40,000 | Unit-of production | 10 |
(Dec 31, 2021) Sudden changes in the operational and market conditions indicate that the sum of undiscounted future cash flows from GigaFactory is now estimated at $5,000,000. The fair value of the GigaFactory as of the date is $4,000,000. After recognizing depreciation expense for 2021 as scheduled, Tesla wrote-off the GigaFactory. The remaining service life is reduced to additional 8 years and the residual value is updated to $500,000. Depreciation for the Gigafactory on these new parameters will start from 2022 with the double-declining method.
*Machinery's estimated total production capacity is 80,000 units of cars. During 2021, Tesla produced a total of 20,000 units using the Machinery.
Teslas 2022 transactions with regard to PP&E are as follow:
(Jun 30, 2022) Truck was sold for $50,000.
*During 2022, Tesla produced a total of 10,000 units using the Machinery.
- Set up amortization schedule for each asset using the following template:
(Example: Truck)
| Truck | ||
Fiscal yr ending: | Depreciation Expense | Accumulated Depreciation | Net Book Value |
12/31/2018 |
|
|
|
: |
|
|
|
12/31/2024
|
|
|
|
- Prepare journal entries for 2021.
- Summarize book values of the fixed assets as of Dec 31, 2021.
31-Dec-21 | |||
Asset | Historical Cost | (less: Accu. Dep) | Net Book Value |
Truck |
|
|
|
Solar Energy Systems |
|
|
|
GigaFactory |
|
|
|
Building |
|
|
|
Machinery |
|
|
|
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