On January 2, 2013, machinery and equipment were purchased at a total invoice co
ID: 2420077 • 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. I posted this question previously and got a response of "152508.3" for the Machinery and equipment and it was not correct. Thank You !
Here are the numbers I came up with. Missing the Machinery and equipment cost.
PELL CORPORATION
Depreciation Expense For the Year Ended December 31, 2013
Land Improvements = $13,000
Building = 90,000
Machinery and equipment = ???
|Automobiles = 21,500
Total depreciation expense for 2013 =
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
Answer:
Since the Machine and Equipment have 10year life and no salvage value....we can say than 10% depreciation is charged every year on straight line basis...
It is assumed that new Machine and Equipment purchased during the year will also have 10 year useful life & having no salvage value. the charges incurred freight and installation charges are also capitalised in the value of Machine and Equipment.
Depreciation on Machinery and Equipment for 2013 = $1,500,000 x 10% = $150,000
Hope the above solution worked out for you....now you can calculate total depreciation expenses..
Opening Balance of Machinery & Equipment 1258000 Add: Addition (New Purchase) 310000 Less: Cost of old machinery sold during the year -68000 Closing balance of machinery 1500000Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.