tice Gradebook ORION Downloadable eTextbook ment Problem 9-5A At December 31, 20
ID: 2558181 • Letter: T
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tice Gradebook ORION Downloadable eTextbook ment Problem 9-5A At December 31, 2016, Skysong SA reported the following as plant assets. Land Buildings Less: Accumulated depreciation-buildings Equipment Less: Accumulated depreciation equipment 3,005,000 29,047,000 10,770,000 18,277,000 40,647,000 4,681,000 35,966,000 Total plant assets 57,248,000 During 2017, the following selected cash transactions occurred April 1 Purchased land for 2,242,000 May 1 Sold equipment that cost 789,000 when purchased on January 1, 2013. The equipment was sold for 489,180. June 1 Sold land purchased on June 1, 2007 for 1,741,000. The land cost 306,000 July 1 Purchased equipment for 2,225,000, Dec. Retired equipment that cost 526,000 when purchased on December 31, 2007. No residual value was 1 received. Journalize 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 residual value. The equipment is estimated to have a 10- year useful life and no residual value. Update depreciation on assets disposed of at the time of sale or retirement. (Credit account titles are automatically indented when amount is entered. Do not indent manually) Date Account Titles and Explanatiorn Debit Credit Policy 1 S 2000-2018 John wiley &Sons.Inc.; All Rights Reserved. A Division of 30hn Wilcy &Sons; IncExplanation / Answer
Date
Accounts Title & Explanation
Debit
Credit
2017
April 1
Land
2242000
Cash
2242000
(For recording purchase of land)
May 1
Depreciation expense
$26300
Accumulated depreciation-equipment
$26300
(For recording depreciation from January 1 to May 1)
May 1
Cash
489180
Accumulated depreciation – equipment
341900
Equipment
789000
Gain sale of equipment
42080
(For recording sale of equipment)
June 1
Cash
1741000
Land
306000
Gain sale of land
1435000
(For recording sale of land)
July 1
Equipment
2225000
Cash
2225000
(For recording purchase of equipment)
Dec. 31
Depreciation expense
839240
Accumulated depreciation-equipment
839240
(For recording depreciation from January 1 to Dec. 31)
Dec. 31
Depreciation expense
580940
Accumulated depreciation-building
580940
(For recording annual depreciation on building)
Dec.
Accumulated depreciation
526000
Equipment
526000
(For retirement of equipment)
Working Note;
1. calculation of profit or loss on sale of equipment;
On 1st January 2013, cost of equipment
789000
Estimated life
10 years
Annual depreciation (7890000 / 10)
78900
Accumulated depreciation from 1st January 2013 to 1st January 2017) (4 * 78900)
315600
Accumulated depreciation from 1st January 2017 to 1st May 2017) (78900 / 3)
26300
Thus total accumulated depreciation (315600 + 26300)
341900
Value of equipment on 1st May 2017 (789000 - 341900)
447100
Sale price on 1st May 2017
489180
Gain on sale (489180 – 447100)
42080
2. Depreciation on equipment having cost $526000;
Annul depreciation on this equipment ($526000 / 10) = $52600
3. Depreciation on remaining equipment will be as follow;
Annula depreciation = (39332000 / 50) = 786640
Partial Statement of Financial Position
Land (3005000 + 2242000 – 306000)
4941000
Building
29047000
Less: Accumulated depreciation-building
(11350940)
17696060
Equipment (40647000 + 2225000 – 789000 - 526000)
41557000
Less: Accumulated depreciation-equipment
(4678640)
36878360
Total plant assets
59515420
Date
Accounts Title & Explanation
Debit
Credit
2017
April 1
Land
2242000
Cash
2242000
(For recording purchase of land)
May 1
Depreciation expense
$26300
Accumulated depreciation-equipment
$26300
(For recording depreciation from January 1 to May 1)
May 1
Cash
489180
Accumulated depreciation – equipment
341900
Equipment
789000
Gain sale of equipment
42080
(For recording sale of equipment)
June 1
Cash
1741000
Land
306000
Gain sale of land
1435000
(For recording sale of land)
July 1
Equipment
2225000
Cash
2225000
(For recording purchase of equipment)
Dec. 31
Depreciation expense
839240
Accumulated depreciation-equipment
839240
(For recording depreciation from January 1 to Dec. 31)
Dec. 31
Depreciation expense
580940
Accumulated depreciation-building
580940
(For recording annual depreciation on building)
Dec.
Accumulated depreciation
526000
Equipment
526000
(For retirement of equipment)
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