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ACC 415 Homework Assignment d in the wudit of the fIenscial stotements of WALLACE Corporstion for the year ended December 31, hief accountant of cho clionm bas peepured the acconmpanying anelyses or e Property, Plant, and quipent end related sccumulatod deprecianion accounts, You have traced the beginning belances to yoor prior vear's audit weeking papers without esception Anstysis of Property, Place, and Equipment ind Relnled Accuplated Deprecintiun Accounts Yenr Ended December 31,201o 5 430.500D 441.700 163,0D0 Baildings FisalAecumslated Depreciation Final 1200 Additions" Retirements S 6.450 5 76,450 Machinery & Equipmen 34,880 S 261.330 e for the WALLACE Corporation deprecimes all plant assets using the straight-line basis (no estimated residual value exists). Estimated service lives are 25 years for the building and 10 years for other items. The company's policy is to depreciate on a monthly basis in the years of acquisition and disposal Your audit revealed the following in fortmation regarding errors d discovered during the audit: 1. On February 1, the company entered in to an eight-year lease contract for a die-casting machine, with anvaal rental payments of S7,500, payable in advance every February I. The lease is cancelable by either party and there is no opticn to renew the lease or buy the equipment at the end of the lease. The estimated service life of the machine is years with no residual value. The company recorded this transaction as ? capital lease recording the lease obligation and the asset at 360,000, the present value at the date of the lease, It also recorded the applicable depreciation expense for the year on the machine 2. The company had a new roof installed on one of its buildings (which it originally purchased an June 30, 1995) The new roof did not extend the life of the building. Completion of the work occurred on June 30, 2010 at a cost of $20,000. The old roof cost $15,000 with a hook value of S7,500 at the time the new roof was completed. The company made all of the correet journal entries to record the disposition of the old asset and capitalization of the nevw asset but it caleulated depreciation for the new roof with a useful life of 25 years. Note: Depreciarion expense for the rest of the building was properly recarded 3. During May 2010, WALLACE Corporation was assessed $6,000 by the city for sewer repsirs. Following the sewer repairs, the company decided to repave the parking lot and complete a landscaping project (the nature of which constitutes an indefinite life). On August 31, 2010, the company paid $3,800 ($3,000 for paving and $800 for landscaping). The chief accountant charged all expenditures to the Land account 4. WALLACE Corporation sold a machine on October 1, 2010 for $28,000 cash. The company purchased the machine on April 1, 2006 for $50,000. The chief accountant recorded depreciation expense of $5,000 on this machine in 2010. All other depreciation expense journal entries were recorded correctly in previous years. 5. Harbor City donated land and a building appraised at $150,000 and $300,000, respectively, to WALLACE Corporation on October 1. Since no costs were involved, the chief accountant made no entry for the above Required 1) Prepare the correcting journal entries that you would propose at December 31, 2010, for each of the five 2) Respond to the related short essay topics below. Your responses should combine your own words plus references to any applicable authoritative and non-authoritative information. You must refer to authoritative literature if applicable. Each response should be a minimum of 100 words and a maximum of 300 words. Perfect sentence structure, spelling, and English usage are reguired. Use professional language. Provide the criteria used to determine whether a lease should be treated as a capital lease or an operating lease by the lessee. Discuss the GAAP guidelines concerning capital expenditures. Specifically, identify what a capital expenditure is and how it should be accounted for. You may refer to non-authoritative literature Discuss the GAAP guidelines concerning the accounting treatment of the acquisition of land. Identify what types of costs are capitalized as Land when acquired, what types of costs would be capitalized as Land Improvements when acquired, and what the difference is regarding subsequent accounting treatments for these two accounts. You may refer to non-authoritative literature. Discuss the effects on the Balance Sheet and the Income Statement of overestimating depreciation before recording the disposal of an asset. You may refer tor Using the FASB Codification, provide the definition of a nonreciprocal transfer and identify the accounting guidelines. a. You may refer to non-authoritative literature. b. c. d. e. Prepare a corrected lead schedule for the Property, Plant, and Equipment and related accumulated depreciation accounts 3) 4) Provide computations to support correcting journal entries; these may be handwritten or typed. 5) Submit all pages to represent the above requirements