Selected accounts included in the property, plant, and equipment section of Lobo Corporation's statement of financial position at December 31, 2018, had the following balances.
Land.....................................$ 300,000
Land improvements.....................140,000
Buildings................................1,100,000
Equipment.................................960,000
During 2019, the following transactions occurred.
1. A tract of land was acquired for $150,000 as a potential future building site.
2. A plant facility consisting of land and building was acquired from Mendota Company in exchange for 20,000 shares of Lobo's ordinary shares. On the acquisition date, Lobo's shares had a closing market price of $37 per share on a national exchange. The plant facility was carried on Mendota's books at $110,000 for land and $320,000 for the building at the exchange date. Current appraised values for the land and building, respectively, are $230,000 and $690,000.
3. Items of equipment were purchased at a total cost of $400,000. Additional costs were incurred as follows.
Freight and unloading.....................................$13,000
Sales taxes....................................................20,000
Installation...................................................26,000
4. Expenditures totaling $95,000 were made for new parking lots, streets, and sidewalks at the company's various plant locations. These expenditures had an estimated useful life of 15 years.
5. Equipment costing $80,000 on January 1, 2011, was scrapped on June 30, 2019. Straight-line depreciation has been recorded on the basis of a 10-year life with no residual values.
6. Equipment was sold for $20,000 on July 1, 2019. Original cost of the equipment was $44,000 on January 1, 2016, and it was depreciated on the straight-line basis over an estimated useful life of 7 years and a residual value of $2,000.
Instructions
a. Prepare a detailed analysis of the changes in each of the following statement of financial position accounts for 2019.
Land.....................................Buildings
Land improvements....................Equipment
b. List the items in the fact situation that were not used to determine the answer to (a), showing the pertinent amounts and supporting computations in good form for each item. In addition, indicate where, or if, these items should be included in Lobo's financial statements.