You are a staff auditor on the 2001 audit of a manufacturing firm, Widgets Inc. Your manager has asked you to perform the fixed asset rollforward for the year. During your work, you have verified the following information. Tolerable Misstatement for Property, Plant and Equipment is $100,000. Tolerable Misstatement for Depreciation Expense is $50,000.

1. Widgets Inc purchased 2 vehicles at a cost of $30,000 each during the year.
2. Widget Inc sold 3 pieces of light duty equipment with a total cost of $220,000, and a total accumulated depreciation of $145,000 for all three pieces of equipment. None of the vehicles were fully depreciated. They recorded a gain of $13,000 on the sale.
3. Widget Inc had to impair a piece of heavy-duty equipment that is expected to be obsolete in the next three years. The company reported a $2 million loss on impairment. You have verified the impairment and amount are appropriate.
4. Widget Incs depreciates its assets on the half-year method. The half-year method takes a half-year of depreciation for any asset added or disposed of during the year, regardless of when the transaction took place.
5. Widget Inc depreciates assets based on the following schedule. You have verified the schedule is in accordance with ASC 360-10-35: Depreciation for Property, Plant, and Equipment.
6. Widget Inc depreciates its asset on a straight-line basis using on the following classification:

Asset Class	Useful Life	Residual Value
Vehicles	5 years	$0
Equipment (Light Duty)	10 years	$0
Equipment (Heavy Duty)	15 years	$0
Building	30 years	25% of Cost

Required:

1. (8 points) Complete the fixed asset rollforward based on (a)-(f) above. Template rollforward is on the following page.
2. (2 points) Widgets Incs draft financial statements show a balance of fixed assets of $24,300,000. What do you conclude about this balance and why?
3. (2 points) Widgets Incs draft financial statements show a total depreciation expense for the year of $405,000. What do you conclude about this total and why?

	Balance			Balance
	12/31/2000	Additions	Disposals	12/31/2001
Vehicles	200,000
Equipment (Light Duty)	1,320,000
Equipment (Heavy Duty)	21,850,000
Building	1,420,000
Land	1,600,000
	26,390,000
	Fully	Accumulated	Depreciation	A/D Related	Accumulated
	Depreciated	Depreciation	Expense	to Disposals	Depreciation
	Asset Cost	12/31/2000	During Year	During Year	12/31/2001
Vehicles	50,000	110,000
Equipment (Light Duty)	-	617,000
Equipment (Heavy Duty)	15,425,000	8,600,000
Building	-	205,000
Land	-	-
	15,475,000	9,532,000