Question

Pell Corporation’s Property, Plant, and Equipment and Accumulated Depreciation accounts had the following balances at December 31, 2015:
Depreciation method and useful lives: 
• Land improvements: Straight- line; 15 years.
• Building: 150%- declining- balance; 20 years.
• Machinery and equipment: Straight- line; 10 years.
• Automobiles: 150%- declining- balance; 3 years.
• Depreciation is computed to the nearest month. No salvage values are recognized.
Transactions during 2016:
1. On January 2, 2016, machinery and equipment were purchased at a total invoice cost of $ 260,000, which included a $ 5,500 charge for freight. Installation costs of $ 27,000 were incurred.
2. On March 31, 2016, a machine purchased for $ 58,000 on January 3, 2012, was sold for $ 36,500.
3. On May 1, 2016, expenditures of $ 50,000 were made to repave parking lots at Pell’s plant location. The work was necessitated by damage caused by severe winter weather.
4. On November 2, 2016, Pell acquired a tract of land with an existing building in exchange for 10,000 shares of Pell’s $ 20 par common stock, which had a market price of $ 38 a share on this date. Pell paid legal fees and title insurance totaling $ 23,000. The last property tax bill indicated assessed values of $ 240,000 for land and $ 60,000 for building. Shortly after acquisition, the building was razed at a cost of $ 35,000 in anticipation of new building construction in 2017.
5. On December 31, 2016, Pell purchased a new automobile for $ 15,250 cash and trade- in of an automobile purchased for $ 18,000 on January 1, 2015. The new automobile has a cash value of $ 19,000.
Required:
1. Prepare a schedule analyzing the changes in each of the plant assets during 2016, with detailed supporting computations. Disregard the related Accumulated Depreciation accounts.
2. For each asset classification, prepare a schedule showing depreciation expense for the year ended December 31, 2016.
3. Prepare a schedule showing the gain or loss from each asset disposal that Pell would recognize in its income statement for the year ended December 31, 2016.


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  • CreatedOctober 05, 2015
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