blem 9-5A December 31, 2019, Grand Company reported the following as plant asset
ID: 2556484 • Letter: B
Question
blem 9-5A December 31, 2019, Grand Company reported the following as plant assets. nd ildings $ 4,000,000 $28,500,000 ss: Accumulated depreciation-buildings 12,100,000 16,400,000 48,000,000 5,000,000 uipment ss: Accumulated depreciation-equipment Total plant assets 43,000,000 $63,400,000 ring 2020, the following selected cash transactions occurred pril 1 Purchased land for $2,130,000. May 1 Sold equipment that cost $750,000 when purchased on January 1, 2016. The equipment was sold for $450,000. lune 1 Sold land purchased on June 1, 2010 for $1,500,000. The land cost $400,000. Duly 1 Purchased equipment for $2,500,000. ec. 31 Retired equipment that cost $500,000 when purchased on December 31, 2010. The company received no proceeds related to salvage. urnalize the above transactions. The company uses straight-line depreciation for buildings and equipment. The buildings are estimated to have a 50-year life and no lvage value. The equipment is estimated to have a 10-year useful life and no salvage value. Update depreciation on assets disposed of at the time of sale or retiremes redit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the roblem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit CreditExplanation / Answer
Journal entries for recording the above transactions will be as follows:
(To record depreciation for the year on equipments)
On Dec 31, 2020 value of assets will be shown as follows:
Note 1: Calulation of Accumulated Depreciation on Equipments
Date Account Debit Credit Apr-01 Land 2,130,000 Cash 2,130,000 (To record purchase of land) May-01 Depreciation Expense ($750,000/10years life*4months/12) 25,000 Accumulated Depreciation - Equipments 25,000 (To record depreciation expense on equipment sold) Cash 450,000 Accumulated Depreciation - Equipments ($750,000/10*4years i.e. from 2016 to 2019 plus 25,000 for current year) 325,000 Gain on disposal of equipment 25,000 Equipment 750,000 (To record sale of equipment) Jun-01 Cash 1,500,000 Gain on disposal of Land 1,100,000 Land 400,000 (To record sale of Land) Jul-01 Equipment 2,500,000 Cash 2,500,000 (To record purchase of equipment) Dec-31 Depreciation Expense ($500,000/10years life) 50,000 Accumulated Depreciation - Equipments 50,000 (To record depreciation expense on equipment sold) Accumulated Depreciation - Equipments 500,000 Equipment 500,000 (To record retirement of equipments) Depreciation Expense (28,500,000/50) 570,000 Accumulated Depreciation - Buildings 570,000 (To record depreciation for the year on Buildings) Depreciation Expense{(48,000,000-750,000-500,000)/10 plus 2,500,000/10*6months/12)} 4,800,000 Accumulated Depreciation - Equipments 4,800,000(To record depreciation for the year on equipments)
On Dec 31, 2020 value of assets will be shown as follows:
Land (4,000,000+2,130,000-400,000) 5,730,000 Buildings 28,500,000 Less: Accumulated Depreciation - Buildings (12,100,000+570,000) 12,670,000 15,830,000 Equipment (48,000,000-750,000+2,500,000-500,000 49,250,000 Less: Accumulated Depreciation - Equipments (Note 1) 9,050,000 40,200,000Note 1: Calulation of Accumulated Depreciation on Equipments
Particulars Amount Opening Balance as on Jan 1, 2020 5,000,000 Less: Accumulated Depreciation on Equipment sold on May 1 (325,000-25,000) -300,000 Less: Accumulated Depreciation on Equipment retired on Dec 31 (500,000-50,000) -450,000 Add: Depreciation expnese for the year on remaining equipments 4,800,000 Balance as on Dec 31, 2020 9,050,000Related Questions
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