Question
The plant asset and accumulated depreciation accounts of Pell Corporation had the following balances at December 31, 2012: Plant Asset Accumulated Depreciation Land $ 335,000
The plant asset and accumulated depreciation accounts of Pell Corporation had the following balances at December 31, 2012: |
Plant Asset | Accumulated Depreciation | |||||
Land | $ | 335,000 | $ | 0 | ||
Land improvements | 175,500 | 42,000 | ||||
Building | 1,470,000 | 335,000 | ||||
Machinery and equipment | 1,128,000 | 390,000 | ||||
Automobiles | 147,000 | 110,500 | ||||
|
Transactions during 2013 were as follows: | |
a. | On January 2, 2013, machinery and equipment were purchased at a total invoice cost of $245,000, which included a $5,200 charge for freight. Installation costs of $24,000 were incurred. |
b. | On March 31, 2013, a machine purchased for $55,000 in 2009 was sold for $35,000. Depreciation recorded through the date of sale totaled $23,375. |
c. | On May 1, 2013, expenditures of $47,000 were made to repave parking lots at Pell's plant location. The work was necessitated by damage caused by severe winter weather. |
d. | On November 1, 2013, Pell acquired a tract of land with an existing building in exchange for 10,000 shares of Pell's common stock that had a market price of $35 per share. Pell paid legal fees and title insurance totaling $21,500. Shortly after acquisition, the building was razed at a cost of $32,000 in anticipation of new building construction in 2014. |
e. | On December 31, 2013, Pell purchased a new automobile for $14,500 cash and trade-in of an old automobile purchased for $16,500 in 2009. Depreciation on the old automobile recorded through December 31, 2013, totaled $12,375. The fair value of the old automobile was $3,600. |
Required: |
For each asset classification, prepare a schedule showing depreciation expense for the year ended December 31, 2013, using the following depreciation methods and useful lives: |
Land improvements |
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