At January 1, 2012, Hammersmith Limited reported the following property, plant, and equipment accounts:
Accumulated depreciation-buildings..................$24,200,000
Accumulated depreciation-equipment...................30,000,000
Buildings......................................................57,000,000
Equipment....................................................96,000,000
Land.............................................................8,000,000
The company uses straight-line depreciation for buildings and equipment, and its year end is December 31. The buildings are estimated to have a 40-year life and no residual value; the equipment is estimated to have a 10-year useful life and no the issue.
During 2012, the following selected transactions occurred:
Apr. 1 Purchased land for $3.8 million. Paid $950,000 cash and issued a 10-year, 6% note for the balance.
May 1 Sold equipment for $700,000 cash. The equipment cost $1.5 million when it was originally purchased on January 1, 2008.
June 1 Sold land for $2.4 million. Received $760,000 cash and accepted a 6% note for the balance. The land cost $600,000 when purchased on June 1, 1996.
July 1 Purchased equipment for $2 million on account, terms n/60.
Sept. 2 Paid amount owing on account for purchase of equipment on July 1.
Dec. 31 Retired equipment that cost $940,000 when purchased on December 31, 2002.
Instructions
(a) Record the above transactions.
(b) Record any adjusting entries required at December 31.
(c) Prepare the property, plant, and equipment section of the company's statement of financial position at December 31, 2012.