Problem 9-4A (Part Level Submission) At January 1, 2017, Crane Company reported
ID: 2537463 • Letter: P
Question
Problem 9-4A (Part Level Submission) At January 1, 2017, Crane Company reported the following property, plant, and equipment accounts: Accumulated depreciation-buildings $61,750,000 Accumulated depreciation-equipment 53,850,000 Buildings Equipment Land 97,200,000 150,100,000 23,450,000 The company uses straight-line depreciation for buildings and equipment, its year-end is December 31, and it makes adjusting entries annually. The buildings are estimated to have a 40-year useful life and no salvage value; the equipment is estimated to have a 10-year useful life and no salvage value During 2017, the following selected transactions occurred. Apr. 1 May 1 June 1 Purchased land for $4.90 million, paid $1.225 million cash and issued a 3-year, 6% note payable for the balance. Interest on the note is payable annually each April 1 Sold equipment for $230,000 cash. The equipment cost $3.78 million when originally purchased on January 1, 2009 Sold land for $3.72 million. Received $870,000 cash and accepted a 3-year, 5% note for the balance. The land cost $1.60 million when purchased on June 1, 2011, Interest on the note is due annually each June 1. July 1 Purchased equipment for $2.20 milion cash Dec. 31 Retired equipment that cost 1 million when purchased on December 31, 2007 No proceeds were received.Explanation / Answer
Answer
Equipment sold on
May-01
Equipment retired on
31-12-2017
Cost
$3780000
Cost
$1000000
Life
10 years
Life
10 years
Annual Depreciation
$378000
Annual Depreciation
$100000
Depreciation from Jan 1 2009 to 31 Dec 2016
$3024000
Depreciation from Jan 1 2008 to 31 Dec 2016
$900000
Depreciation in 2017 till 30 June
$189000
Depreciation in 2017 till 31 Dec
$100000
Total depreciation when sold
$3213000
Total depreciation when sold
$1000000
Book Value when sold
$567000
Sold for
$230000
Loss on Sale
$337000
Date
Accounts Title
Debit ($)
Credit ($)
01-Apr-17
Land
4900000
Cash
1225000
Notes payable
3675000
01-May-17
Depreciation expense
189000
Accumulated Depreciation-Equipment
189000
01-May-17
Cash
230000
Accumulated Depreciation-Equipment
3213000
Loss on sale of sale
337000
Equipment
3780000
01-Jun-17
Cash
870000
Notes Receivables
2850000
Land
1600000
Gain on Sale
2120000
01-Jul-17
Equipment
2200000
Cash
2200000
31-Dec-17
Depreciation expense
100000
Accumulated Depreciation-Equipment
100000
31-Dec-17
Equipment
1000000
Accumulated Depreciation-Equipment
1000000
Equipment sold on
May-01
Equipment retired on
31-12-2017
Cost
$3780000
Cost
$1000000
Life
10 years
Life
10 years
Annual Depreciation
$378000
Annual Depreciation
$100000
Depreciation from Jan 1 2009 to 31 Dec 2016
$3024000
Depreciation from Jan 1 2008 to 31 Dec 2016
$900000
Depreciation in 2017 till 30 June
$189000
Depreciation in 2017 till 31 Dec
$100000
Total depreciation when sold
$3213000
Total depreciation when sold
$1000000
Book Value when sold
$567000
Sold for
$230000
Loss on Sale
$337000
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