Engineers and Contractors Ltd. (ECL) is a public company in the business of road construction. ECL...

   

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Engineers and Contractors Ltd. (ECL) is a public company in the business of road construction. ECL has a December 31 year end, and uses the cost model to account for its equipment, machinery and building. ECL uses the fair value model to account for any investment properties. Selected accounts from the corporation's trial balance as at December 31, 2015, are as follows: Cost Accumulated Depreciation/ Amortization Machine- Asphalt Grinder (Note 1) $2,500,000 $1,093,750 Specialized Equipment- Asphalt Paver (Note 2) 1,900,000 435,000 Machine- Concrete Mixer (Note 3) 1,350,000 864,000 Building (Note 4) 1,650,000 700,000 130,000 50,000 Patent (Note 5) Amortization/Depreciation policies: Specialized equipment- units of production method Machines- double declining balance method Building- straight-line method Intangible assets- straight line method The following additional information relating to fiscal 2016 is provided: Note 1: The asphalt grinder machine was purchased in 2014, with an estimated useful life of 8 years and a residual value of $200,000. Note 2: The asphalt paver equipment was purchased in 2013, with an estimated useful life of 15,000 hours and a residual value of $100,000. During 2013, 2014, 2015, and 2016 the paver was used for 875 hours, 1,500 hours, 1,250 hours, and 950 hours respectively. Note 3: The concrete mixer machine was purchased in 2014, with an estimated useful life of 5 years and a residual value of $450,000. Note 4: The building was purchased in 2006, with an estimated useful life of 20 years, and a residual value of $250,000. The building was sold on December 31, 2016 for $1,020,000. Note 5: The patent was purchased on January 1, 2011 and expires on December 31, 2028, with no residual value. ECL plans to use the patent until December 31, 2023. On January 1, 2016, ECL incurred legal costs of $35,000 in cash to successfully defend the patent. Note 6: A warehouse is purchased on March 1, 2016 for $680,000 cash. It will be used to generate rental income and is classified as investment property. It has an estimated useful life of 20 years and a residual value of $450,000. The fair value of the warehouse on December 31, 2016 is $690,000. Required: Prepare all necessary journal entries and adjusting journal entries for the 2016 fiscal year. Show all calculations and round all numbers to the nearest cent. 5 Engineers and Contractors Ltd. (ECL) is a public company in the business of road construction. ECL has a December 31 year end, and uses the cost model to account for its equipment, machinery and building. ECL uses the fair value model to account for any investment properties. Selected accounts from the corporation's trial balance as at December 31, 2015, are as follows: Cost Accumulated Depreciation/ Amortization Machine- Asphalt Grinder (Note 1) $2,500,000 $1,093,750 Specialized Equipment- Asphalt Paver (Note 2) 1,900,000 435,000 Machine- Concrete Mixer (Note 3) 1,350,000 864,000 Building (Note 4) 1,650,000 700,000 130,000 50,000 Patent (Note 5) Amortization/Depreciation policies: Specialized equipment- units of production method Machines- double declining balance method Building- straight-line method Intangible assets- straight line method The following additional information relating to fiscal 2016 is provided: Note 1: The asphalt grinder machine was purchased in 2014, with an estimated useful life of 8 years and a residual value of $200,000. Note 2: The asphalt paver equipment was purchased in 2013, with an estimated useful life of 15,000 hours and a residual value of $100,000. During 2013, 2014, 2015, and 2016 the paver was used for 875 hours, 1,500 hours, 1,250 hours, and 950 hours respectively. Note 3: The concrete mixer machine was purchased in 2014, with an estimated useful life of 5 years and a residual value of $450,000. Note 4: The building was purchased in 2006, with an estimated useful life of 20 years, and a residual value of $250,000. The building was sold on December 31, 2016 for $1,020,000. Note 5: The patent was purchased on January 1, 2011 and expires on December 31, 2028, with no residual value. ECL plans to use the patent until December 31, 2023. On January 1, 2016, ECL incurred legal costs of $35,000 in cash to successfully defend the patent. Note 6: A warehouse is purchased on March 1, 2016 for $680,000 cash. It will be used to generate rental income and is classified as investment property. It has an estimated useful life of 20 years and a residual value of $450,000. The fair value of the warehouse on December 31, 2016 is $690,000. Required: Prepare all necessary journal entries and adjusting journal entries for the 2016 fiscal year. Show all calculations and round all numbers to the nearest cent. 5