Sugden Company has a December 31 fiscal year end and follows IFRS. The following selected transactions are related to its property, plant, and equipment in 2017:

Jan. 22 Performed an annual safety inspection on the equipment for 54600.

Apr. 10 Installed a conveyor belt system in the factory for 595,000, which is expected to increase efficiency and allow the company to produce more products each year.

May 6 Painted the interior of the entire building at a cost of 530500.

July 20 Repaired a machine for 510,000. An employee had used incorrect material in the machine, which resulted in a complete mechanical breakdown.

Aug. 7 Overhauled equipment that originally cost $100,000 for 535,000. This increased the equipment's expected useful life by three years.

15 Trained several new employees to operate the company's equipment at a cost of 51,900.

Oct. 25 Paid 516,700 for the purchase of new equipment and $1,500 to a consultant for testing and installing the equipment.

Nov. 6 Added an elevator and ramps to a building owned by the company to make it wheelchair-accessible for 5120,000.

Dec. 31 After recording annual depreciation, Sugden reviewed its property, plant, and equipment for possible impairment. Sugden determined the following:

. The recoverable amount of equipment that originally cost $250,000 and has accumulated depreciation of 575,000 is 590,000.

2. Land that originally cost $575.000 had previously been written down to 5500.000 as a resuk of an impairment in 2014. Circumstances have changed. and the land's recoverable amount is now $600,000.

Instructions

(a) For each of these transactions, indicate if the transaction increased (+) or decreased (−) Land, Building, Equipment, Accumulated Depreciation, total property, plant, and equipment (PP&E), and profit, and by how much. If the item is not changed, write "NE" to indicate there is no effect. Use the following format, in which the first one has been done for you as an example.

(b) Prepare journal entries to record the above transactions. All transactions are on account.
Taking It Further
Assume that Sugden also purchased equipment with an expected useful life of 15 years and that the equipment's engine will need to be replaced every five years. Which useful life should Sugden use when calculating depreciation on the equipment? Explain.

Transcribed Image Text:

Accumulated Total Transaction Land Building Equipment Depreciation E Profit NE Jan. 22 NE NE NE NE -$4,600