Selected accounts included in the property, plant, and equipment section of Lobo Corporations balance sheet at December
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Question:
Selected accounts included in the property, plant, and equipment section of Lobo Corporation’s balance sheet at December 31, 2013, had the following balances.
Land | $359,400 | |
Land improvements | 167,720 | |
Buildings | 1,317,800 | |
Equipment | 1,150,080 |
During 2014, the following transactions occurred.
1. | A tract of land was acquired for $167,100 as a potential future building site. | |
2. | A plant facility consisting of land and building was acquired from Mendota Company in exchange for 22,280 shares of Lobo’s common stock. On the acquisition date, Lobo’s stock had a closing market price of $37 per share on a national stock exchange. The plant facility was carried on Mendota’s books at $122,540 for land and $356,480 for the building at the exchange date. Current appraised values for the land and building, respectively, are $275,540 and $826,620. | |
3. | Items of machinery and equipment were purchased at a total cost of $479,200. Additional costs were incurred as follows. |
Freight and unloading | $15,574 | |
Sales taxes | 23,960 | |
Installation | 31,148 |
4. | Expenditures totaling $113,810 were made for new parking lots, streets, and sidewalks at the corporation’s various plant locations. These expenditures had an estimated useful life of 15 years. | |
5. | A machine costing $95,840 on January 1, 2006, was scrapped on June 30, 2014. Double-declining-balance depreciation has been recorded on the basis of a 10-year life. | |
6. | A machine was sold for $23,960 on July 1, 2014. Original cost of the machine was $52,712 on January 1, 2011, and it was depreciated on the straight-line basis over an stimated useful life of 7 years and a salvage value of $2,396. |
(a)
Prepare a detailed analysis of the changes in each of the following balance sheet accounts for 2014. (Hint: Disregard the related accumulated depreciation accounts.)
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