P10-5A 2017. Grand Company reparted the tollowing as plant assets December 31, 2

Question

P10-5A

2017. Grand Company reparted the tollowing as plant assets December 31, 2017, Grand Com Land Buiklings malaced dupreciation building $23. 10 umulated depreciation-equipment 48,000,000 $28,500,000 4,000,000 12,100,000 16,400,000 5,000,000 3,oo $63,400,000 related to parchas, sale etiremen, and depr EL 2.3,5) Total plant assets the following selected cash transactions 2018, rhased land for $2,130,000 nt that cost $750,000 when purchased on Janua uipmehased on June 1, 2008 for $1,500,000. The land cost $400,000. was sold for $450,000 ry 1, 2014. The ne Sold land juDe Purchased equipment for $2,500,000. al J Retired equipment co ent that cost $500,000 when purchased on December 31, 2008. received no proceeds related to salvage. Journalize the above buildings and equipment. transactions. The company uses straight-line depreciation for ent. The buildings are estimated to have a 50-year life and no (b) Depreciation Expeni nstructions and equipm salvage value. The is Record adjusting entries for de ment is estimated to have a 10-year useful life and no salvage ation on assets disposed of at the time of sale or retirement. Buildings Equipment $4,800,00 $61,760,000 $570,000 preciation for 2018. auant assets section of Grand's balance sheet at December 31, 201s. bl (c) Total plant assets Prepare 243

Explanation / Answer

a. In the books of Grand Company:

b. Adjusting Entries:

Depreciation on original equipment remaining : [$ 48,000,000 - $ ( 750,000 + 500,000) ] / 10 = $ 4,675,000

Depreciation on equipment purchased during the year : $ 2,500,000 / 10 x 1/2 = $ 125,000

Tota depreciation expense on equipment = $ 4,675,000 + $ 125,000 = $ 4,800,000.

c. Grand Company

Balance Sheet ( Partial)

December 31, 2018

Date Account Titles Debit Credit 2018 $ $ April 1 Land 2,130,000 Cash 2,130,000 May 1 Depreciation Expense 25,000 Accumulated Depreciation : Equipment 25,000 May 1 Cash 450,000 Accumulated Depreciation : Equipment 325,000 Equipment 750,000 Gain on Disposal of Equipment 25,000 June 1 Cash 1,500,000 Land 400,000 Gain on Disposal of Land 1,100,000 July 1 Equipment 2,500,000 Cash 2,500,000 Dec 31 Depreciation Expense 50,000 Accumulated Depreciation : Equipment 50,000 Dec 31 Accumulated Depreciation : Equipment 500,000 Equipment 500,000

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