Fir Corporation commenced operations on September 1, 2019. With respect to property, plant and equipment, the...

 

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Fir Corporation commenced operations on September 1, 2019. With respect to property, plant and equipment, the company completed the following transactions: BUSI 293 Assignment on Property, Plant and Equipment 2019: September 1": The company paid $4,000,000 to purchase the following assets: Asset Land Building Equipment. Appraised Value $1,200,000 $2,100,000 $1,100,000 Useful Life Residual Value 20 years 8 years. Fir plans to use straight line depreciation for both buildings and equipment. December 1st: Purchased two identical delivery vans with a list price of $65,000 each for $120,000 cash. It is expected that the trucks will be used for eight years, and each van will be driven a total of 200,000 kilometres. The residual value is expected to be $12,000 for each van and the company will use the units of production method to depreciate the trucks. $500,000 $0 December 31st: Recorded depreciation on the assets. The first van travelled 4,000 kilometres in December and the second van travelled 1,600 kilometres. 2020: May 1: Fir acquired additional manufacturing equipment for $200,000. The equipment was brand new and the useful life was expected to be 10 years. The company planned to use declining balance method for this equipment. Due to expected obsolescence, the residual value was set to $0. December 31st: Recorded depreciation on the assets. Van 1 travelled 40,000 kilometres in 2020 and Van 2 travelled 32,000 kilometres. 2021: January 1st: Fir determined that the useful life remaining on the building purchased in 2019 is 14 years and the residual value will be $0. July 1st: Fir sold some of the equipment purchased in 2019. The original cost assigned to the equipment sold was $300,000. It received cash proceeds of $180,000 for the equipment. Required: 1. Prepare the journal entries to record the transactions for 2019 and 2020 (14 marks) 2. Provide the appropriate statement of financial position disclosure at December 31", 2020. (8 marks) 3. Calculate the revised depreciation expense for the building for 2021. (3 marks) 4. Record the sale of the equipment in 2021. (5 marks) Fir Corporation commenced operations on September 1, 2019. With respect to property, plant and equipment, the company completed the following transactions: BUSI 293 Assignment on Property, Plant and Equipment 2019: September 1": The company paid $4,000,000 to purchase the following assets: Asset Land Building Equipment. Appraised Value $1,200,000 $2,100,000 $1,100,000 Useful Life Residual Value 20 years 8 years. Fir plans to use straight line depreciation for both buildings and equipment. December 1st: Purchased two identical delivery vans with a list price of $65,000 each for $120,000 cash. It is expected that the trucks will be used for eight years, and each van will be driven a total of 200,000 kilometres. The residual value is expected to be $12,000 for each van and the company will use the units of production method to depreciate the trucks. $500,000 $0 December 31st: Recorded depreciation on the assets. The first van travelled 4,000 kilometres in December and the second van travelled 1,600 kilometres. 2020: May 1: Fir acquired additional manufacturing equipment for $200,000. The equipment was brand new and the useful life was expected to be 10 years. The company planned to use declining balance method for this equipment. Due to expected obsolescence, the residual value was set to $0. December 31st: Recorded depreciation on the assets. Van 1 travelled 40,000 kilometres in 2020 and Van 2 travelled 32,000 kilometres. 2021: January 1st: Fir determined that the useful life remaining on the building purchased in 2019 is 14 years and the residual value will be $0. July 1st: Fir sold some of the equipment purchased in 2019. The original cost assigned to the equipment sold was $300,000. It received cash proceeds of $180,000 for the equipment. Required: 1. Prepare the journal entries to record the transactions for 2019 and 2020 (14 marks) 2. Provide the appropriate statement of financial position disclosure at December 31", 2020. (8 marks) 3. Calculate the revised depreciation expense for the building for 2021. (3 marks) 4. Record the sale of the equipment in 2021. (5 marks)

Answer rating: 100% (QA)

1 JOURNAL ENTRIES SEPTEMBER 1 2019 LAND AC DR 1200000 BUILD... View the full answer