A. Penzema Corporation acquired a property, plant, and equipment through governmental grant. Explain the different ways which
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Question:
A. Penzema Corporation acquired a property, plant, and equipment through governmental grant. Explain the different ways which Penzema Corporation can apply in valuing such assets.
B. The plant asset and accumulated depreciation accounts of Penzema Corporation had the following balances at December 31, 2020:
Transactions during 2021 were as follows:
B. The plant asset and accumulated depreciation accounts of Penzema Corporation had the following balances at December 31, 2020:
Transactions during 2021 were as follows:
On January 2, 2021, equipment were purchased at a total invoice cost of $260,000, which included a $5,500 charge for freight. Installation costs of $27,000 were incurred.
On May 1, 2021, expenditures of $50,000 were made to repave parking lots at the company plant location. The work was necessitated by damage caused by severe weather. The repair doesn’t provide future benefits beyond those originally anticipated.
On November 1, 2021, the company acquired a tract of land with an existing building in exchange for 10,000 shares of Penzema common stock that had a market price of $38 per share. Penzema paid legal fees and title insurance totaling $23,000. Shortly after acquisition, the building was razed at a cost of $35,000 in anticipation of new building construction in 2022 for $2,000,000.
On December 31, 2021, Penzema purchased a small storage building by giving $15,250 cash and an old automobile purchased for $18,000 in 2014. Depreciation on the old automobile recorded through December 31, 2021, represented 75% of the asset value. The fair value of the old automobile was $3,750.
Required:
Show how the above events affected the different assets of Penzema Company and record all the related transactions.
Show how the above events affected the different assets of Penzema Company and record all the related transactions.
Calculate the depreciation expense for each asset for the year 2021 after incorporation all the changes.
Show how the different assets will be reported in the statement of financial position as at December 31, 2021.
Explain how the application of the different depreciation methods will affect the calculation of the retained earnings of the company.
Related Book For
Intermediate Accounting
ISBN: 978-0132162302
1st edition
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
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