The plant asset and accumulated depreciation accounts of Pell Corporation had th
ID: 2487714 • Letter: T
Question
The plant asset and accumulated depreciation accounts of Pell Corporation had the following balances at December 31, 2012: Plant Asset Accumulated Depreciation Land $ 490,000 $ — Land improvements 250,000 59,000 Building 2,200,000 364,000 Machinery and equipment 1,186,000 419,000 Automobiles 220,000 126,000 Transactions during 2013 were as follows: a. On January 2, 2013, machinery and equipment were purchased at a total invoice cost of $330,000, which included a $6,900 charge for freight. Installation costs of $41,000 were incurred. b. On March 31, 2013, a machine purchased for $72,000 in 2009 was sold for $50,500. Depreciation recorded through the date of sale totaled $26,750. c. On May 1, 2013, expenditures of $64,000 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 $36 per share. Pell paid legal fees and title insurance totaling $37,000. Shortly after acquisition, the building was razed at a cost of $49,000 in anticipation of new building construction in 2014. e. On December 31, 2013, Pell purchased a new automobile for $16,650 cash and trade-in of an old automobile purchased for $25,000 in 2009. Depreciation on the old automobile recorded through December 31, 2013, totaled $14,900. The fair value of the old automobile was $5,150. Required: 1. Prepare a schedule analyzing the changes in each of the plant assets during 2013.
2. Prepare a schedule showing the gain or loss from each asset disposal that would be recognized in Pell’s income statement for the year ended December 31, 2013.
Explanation / Answer
Answer 1. Schedule for Changes in Plant Assets during 2013 Balance Increase Decrease Balance Land 490,000 446,000 936,000 Land Improvements 250,000 64,000 314,000 Buildings 2,200,000 2,200,000 Mach. & Equipments 1,186,000 371,000 72,000 1,485,000 Automobiles 220,000 21,800 25,000 216,800 Total 4,346,000 902,800 97,000 5,151,800 1. Increase in Mach = 330,000 (Cost) + 41000 (Installation Costs) = $371,000 2. Increse in Land = 10000 Shares X $36 + 37000 + 49000 = 446,000 3. Increase in Automobiles = 16650 (Cash Paid) + 5150 (Fair avlue of Old Automobile) = 21800 Answer 2. Schedule Of Gain or Loss on Sale or Exchange of Assets Selling Price Cost of Assets Accumulated Dep. Book Value Gain (Loss) (A) (B) © (D =B -C) (A-D) Machinery 50,500 72,000 26,750 45,250 5,250 Automobile 5150 25,000 14,900 10,100 (4,950)
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.