Beerbo began the fiscal year 2021 with no plant assets. On January 1, 2021, Beerbo purchased several plant assets (a.k.a. fixed assets; property, plant, and equipment) for a total price of $100,000 cash. The details of the assets purchased are as follows:

Asset	Market Value ($)	Residual Value ($)	Useful Life	Depreciation Method
Land	30,000	90,000	???	???
Building	45,000	5,000	25 years	straight-line
Vehicle	7,500	0	40,000 miles	units-of-production
Furniture	7,500	0	5 years	double-declining-balance
Equipment	60,000	0	8 years	straight-line

Beerbo occupied the building and also began using the furniture immediately after purchase. However, Beerbo did not begin using the equipment until April 1, 2020. Beerbo plans to drive the vehicle as follows:

Fiscal Year	Driving Miles (estimated)
2021	6,000
2022	8,000
2023	10,000
2024	12,000
2025	14,000

Assume Beerbo has a December 31 fiscal year-end. Also, assume the Beerbo has the following accounts set up in its ledger:

• Accumulated Depreciation – Building
• Accumulated Depreciation – Equipment
• Accumulated Depreciation – Furniture
• Accumulated Depreciation – Land
• Accumulated Depreciation – Vehicle
• Building
• Cash
• Depreciation Expense – Building
• Depreciation Expense – Equipment
• Depreciation Expense – Furniture
• Depreciation Expense – Land
• Depreciation Expense – Vehicle
• Equipment
• Furniture
• Gain on Sale of Plant Asset
• Land
• Loss on Sale of Plant Asset
• Maintenance Expense
• Vehicle

16. 1.a) January 1, 2020 journal entry (LO 7.1)

Write out the journal entry that Beerbo would record for the lump-sum / basket purchase above.

16. 1.b) Capitalize or expense (7.2)

Beerbo spent an additional $5,000 cash clearing the land to prepare it for use. Write out the journal entry that Beerbo would record for this expenditure.

16. 1. c) Depreciation schedules (7.3)

Given the assumptions above, calculate how much depreciation expense Beerbo would record for each asset purchased in each of the fiscal years below. Assume depreciation is recorded once at the end of each fiscal year. Round to the nearest dollar.

Depreciation Expense ($)
Asset	2021	2022	2023	2024	2025
Land
Building
Vehicle
Furniture
Equipment

16. 1.d) Netbook value schedules (7.3)

Given the assumptions above, calculate the book value (a.k.a. net book value) that Beerbo would report for each asset at the end of the fiscal years below. Assume depreciation is recorded once at the end of each fiscal year. Round to the nearest dollar.

Net Book Value ($)
Asset	2021	2022	2023	2024	2025
Land
Building
Vehicle
Furniture
Equipment

16. 1.e) Sale of assets (7.4)

Assume Beerbo sold certain assets as follows:

Asset	Sale Date	Useful Life Consumed	Cash Proceeds Received ($)
Vehicle	Jan. 1, 2025	32,000 miles	500
Furniture	Jan. 1, 2026	5 years	389
Equipment	Jan. 1, 2027	5.75 years	12,000

Assume at the date of sale, all depreciation expenses incurred to date had been recorded (i.e. all accumulated depreciation was up-to-date).

16. 1.e.i) Write out the journal entry for the sale of the vehicle. Round to the nearest dollar.

16. 1.e.ii) Write out the journal entry for the sale of the furniture. Round to the nearest dollar.

16. 1.e.iii) Write out the journal entry for the sale of the equipment. Round to the nearest dollar.

Answer rating: 100% (QA)

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