Sugden Company has a December 31 fiscal year end and follows IFRS. The following selected transactions are related to its property, plant, and equipment in 2024: Jan. 22 Performed an annual safety inspection on the equipment for $4,600. Apr. 10 Installed a conveyor belt system in the factory for $95,000, which is expected to increase efficiency and allow the company
Sugden Company has a December 31 fiscal year end and follows IFRS. The following selected transactions are related to its property, plant, and equipment in 2024:
Jan. 22 Performed an annual safety inspection on the equipment for $4,600.
Apr. 10 Installed a conveyor belt system in the factory for $95,000, which is expected to increase efficiency and allow the company to produce more products each year.
May 6 Painted the interior of the entire building at a cost of $30,500.
July 20 Repaired a machine for $10,000. An employee had used incorrect material in the machine, which resulted in a complete mechanical breakdown.
Aug. 7 Overhauled equipment that originally cost $100,000 for $35,000. This increased the equipment’s expected useful life by three years. 15 Trained several new employees to operate the company’s equipment at a cost of $1,900.
Oct. 25 Purchased equipment for $16,700 and paid $1,500 to a consultant for testing and installing the equipment.
Nov. 6 Added an elevator and ramps to a building owned by the company to make it wheelchair accessible for $120,000.
Dec. 31 After recording annual depreciation, Sugden reviewed its property, plant, and equipment for possible impairment. Sugden determined the following:
1. The recoverable amount of equipment that originally cost $250,000 and has accumulated depreciation of $75,000 is $90,000.
2. Land that originally cost $575,000 had previously been written down to $500,000 as a result of an impairment in 2021. Circumstances have changed, and the land’s recoverable amount is now $600,000.
a. For each of these transactions, indicate if the transaction increased (+) or decreased (−) Land; Building; Equipment; Accumulated Depreciation; total property, plant, and equipment (PP&E); and profit, and by how much. If the item is not changed, write “NE” to indicate there is no effect. Use the following format, in which the first one has been done for you as an example.
b. Prepare journal entries to record the above transactions. All transactions are on account.
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Accounting Principles Volume 2
9th Canadian Edition
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak