The plant asset and accumulated depreciation accounts of Pell Corporation had th

Question

The plant asset and accumulated depreciation accounts of Pell Corporation had the following balances at December 31, 2015: Accumulated Plant Asset Depreciation Land Land improvements Building Machinery and equipment 1,078,000365 000 Automobiles S 310,000 168,000 1,420,000 37,000 310,000 142.000 108.000 a. On January 2, 2016, machinery and equipment were purchased at a total invoice cost of $220000 wwhich b. On March 31, 2016, a machine purchased for $50.000 in 2012 was sold for $32,500 Depreciation c On May 1, 2016, expenditures of 542.000 were made to repave parking lots at Pell's plant location The d. On November 1 2016. Pell acquired a tract of land with an existing building in exchange for 10,000 Transactions during 2016 were as follows: included a 54.700 charge for freight Installation costs of $19,000 were incurred recorded through the date of sale totaled $21 250 work was necessitated by damage caused by severe winter weather shares of Pell's common stock that had a market price of $30 per share Pell paid legal feesland title insurance totaling $19000 Shortly after acquisition the building was razed at a cost of $27,000 in anticipation of new building construction in 2017 e On December 31. 2016 Pell purchased a new automobile for $13.250 cash and trade-in of an old automobile purchased for $14 000 in 2012 Depreciation on the old automobile recorded through December 31 2016 totaled $10 500 The fair value of the old automobile was $3 350 Required:

Explanation / Answer

Solution:

Preparing a Schedule Showing Depreciation for the Year Ended December 31, 2016 by using the following Depreciation Methods and Useful Lifes:

PELL CORPORATION

Depreciation Expense

For the Year Ended December 31, 2016

PELL CORPORATION

Depreciation Expense

For the Year Ended December 31, 2016

Land Improvements: Cost $168,000 Straight Line Rate (1/15 Years) * 0.067 $11,200 Building: Book value 12/31/15 ($1,420,000 - $310,000) $1,110,000 150% declining balance rate: (1/20 Years = 5% * 1,5) * 7.5% $83,250 Machinery and Equipment: Balance, 12/31/15 $1,078,000 Deduct machine sold ($50,000) $1,028,000 Straight Line Rate (1/10 Years) * 10% $102,800 Purchased 1/2/16 $239,000 Straight Line Rate (1/10 Years) * 10% $23,900 Machine sold 3/31/16 $50,000 Depreciation for three months * 2.5% $1,250 Total depreciation on machinery and equipment $127,950 Automobiles: Book value on 12/31/15 ($142,000 - 108,000) $34,000 150% declining balance rate: (1/3 Years = 3.333% * 1,5) *50% $17,000 Total Depreciation Expense for 2016 $239,400

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