On January 2, 2013, machinery and equipment were purchased at a total invoice co
ID: 2420021 • Letter: O
Question
On January 2, 2013, machinery and equipment were purchased at a total invoice cost of $310,000, which included a $6,500 charge for freight. Installation costs of $37,000 were incurred.
On March 31, 2013, a machine purchased for $68,000 in 2009 was sold for $41,500. Depreciation recorded through the date of sale totaled $28,900.
On May 1, 2013, expenditures of $60,000 were made to repave parking lots at Pell's plant location. The work was necessitated by damage caused by severe winter weather.
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 $48 per share. Pell paid legal fees and title insurance totaling $28,000. Shortly after acquisition, the building was razed at a cost of $45,000 in anticipation of new building construction in 2014.
On December 31, 2013, Pell purchased a new automobile for $17,750 cash and trade-in of an old automobile purchased for $23,000 in 2009. Depreciation on the old automobile recorded through December 31, 2013, totaled $17,250. The fair value of the old automobile was $4,250.
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:
Depreciation is computed to the nearest month and no residual values are used. (Do not round intermediate calculations.)
I am having issues coming up with the correct amount for Machinery and equipment below. Please help. Thank You !
Plant Asset AccumulatedDepreciation Land $ 400,000 $ 0 Land improvements 195,000 55,000 Building 1,600,000 400,000 Machinery and equipment 1,258,000 455,000 Automobiles 160,000 117,000
Explanation / Answer
Calculation of Depreciation on Machinery & Equipments Amount ($) Depreciation for the opening value of the assets 125800 [1258000/10] Less: Depreciation not to be charged for the asset sold for the period 01.04.2013 to 31.12.2013 5100 [68000/10]*9/12 Add: Depreciation for the asset purchased on 02.01.213 31808.33 [347000/10]*11/12 Depreciation to be charged 152508.3
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