At December 31, 2019, Marigold Enterprises reported the following as plant assets. Land €4,100,000 Buildings €27,530,000 Less: Accumulated depreciation-buildings 13,490,000 14,040,000 Equipment Less: Accumulated depreciation-equipment 48,500,000 5,190,000 43,310,000 Total plant assets €61,450,000
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Journalize the above transactions. The company uses straight-line
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Prepare the plant assets section of Marigold's
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- On July 1, 2018, Mundo Corporation purchased factory equipment for 50,000. Residual value was estimated at 2,000. The equipment will be depreciated over 10 years using the double-declining balance method. Counting the year of acquisition as one-half year, Mundo should record 2019 depredation expense of: a. 7,680 b. 9,000 c. 9,600 d. 10,000Estimate the average total estimated useful life of depreciable property, plant, and equipment. Starbucks reports 580.6 million of depreciation and amortization in the statement of cash flows, of which 4.5 million relates to amortization of limited-life intangible assets. Does the estimate reconcile with stated accounting policy on useful lives for property, plant, and equipment? Explain.Gray Companys financial statements showed income before income taxes of 4,030,000 for the year ended December 31, 2020, and 3,330,000 for the year ended December 31, 2019. Additional information is as follows: Capital expenditures were 2,800,000 in 2020 and 4,000,000 in 2019. Included in the 2020 capital expenditures is equipment purchased for 1,000,000 on January 1, 2020, with no salvage value. Gray used straight-line depreciation based on a 10-year estimated life in its financial statements. As a result of additional information now available, it is estimated that this equipment should have only an 8-year life. Gray made an error in its financial statements that should be regarded as material. A payment of 180,000 was made in January 2020 and charged to expense in 2020 for insurance premiums applicable to policies commencing and expiring in 2019. No liability had been recorded for this item at December 31, 2019. The allowance for doubtful accounts reflected in Grays financial statements was 7,000 at December 31, 2020, and 97,000 at December 31, 2019. During 2020, 90,000 of uncollectible receivables were written off against the allowance for doubtful accounts. In 2019, the provision for doubtful accounts was based on a percentage of net sales. The 2020 provision has not yet been recorded. Net sales were 58,500,000 for the year ended December 31, 2020, and 49,230,000 for the year ended December 31, 2019. Based on the latest available facts, the 2020 provision for doubtful accounts is estimated to be 0.2% of net sales. A review of the estimated warranty liability at December 31, 2020, which is included in other liabilities in Grays financial statements, has disclosed that this estimated liability should be increased 170,000. Gray has two large blast furnaces that it uses in its manufacturing process. These furnaces must be periodically relined. Furnace A was relined in January 2014 at a cost of 230,000 and in January 2019 at a cost of 280,000. Furnace B was relined for the first time in January 2020 at a cost of 300,000. In Grays financial statements, these costs were expensed as incurred. Since a relining will last for 5 years, Grays management feels it would be preferable to capitalize and depreciate the cost of the relining over the productive life of the relining. Gray has decided to nuke a change in accounting principle from expensing relining costs as incurred to capitalizing them and depreciating them over their productive life on a straight-line basis with a full years depreciation in the year of relining. This change meets the requirements for a change in accounting principle under GAAP. Required: 1. For the years ended December 31, 2020 and 2019, prepare a worksheet reconciling income before income taxes as given previously with income before income taxes as adjusted for the preceding additional information. Show supporting computations in good form. Ignore income taxes and deferred tax considerations in your answer. The worksheet should have the following format: 2. As of January 1, 2020, compute the retrospective adjustment of retained earnings for the change in accounting principle from expensing to capitalizing relining costs. Ignore income taxes and deferred tax considerations in your answer.
- Refer to the information for Cox Inc. above. What amount would Cox record as depreciation expense for 2019 if the units-of-production method were used ( Note: Round your answer to the nearest dollar)? a. $179,400 b. $184,000 c. $218,400 d. $224,000Assets Acquired by Exchange Bremer Company made the following exchanges of assets during 2019: 1. Acquired a more advanced machine worth 10,000 by paying 2,000 cash and giving up a machine that had originally cost 40,000 and has a book value of 12,000, 2. Acquired a building worth 55,000 by paying 5,000 cash and giving up a piece of land that had originally cost 35,000. 3. Acquired a more advanced machine worth 20,000 by paying 5,000 cash and giving up a machine that had originally cost 13,000 and has a book value of 11,000. 4. Acquired a car by giving up a truck that had originally cost 20,000, has a book value of 15,000, and has a blue book value of 16,800. In addition, the company received 1,000 cash. Required: Prepare Bremers journal entry for each exchange. Assume all exchanges were determined to have commercial substance.Chapman Inc. purchased a piece of equipment in 2018. Chapman depreciated the equipment on a straight-line basis over a useful life of 10 years and used a residual value of $12,000. Chapmans depreciation expense for 2019 was $11,000. What was the original cost of the building? a. $98,000 b. $110,000 c. $122,000 d. $134,000
- Comprehensive: Acquisition, Subsequent Expenditures, and Depreciation On January 2, 2019, Lapar Corporation purchased a machine for 50,000. Lapar paid shipping expenses of 500, as well as installation costs of 1,200. The company estimated that the machine would have a useful life of 10 years and a residual value of 3,000. On January 1, 2020, Lapar made additions costing 3,600 to the machine in order to comply with pollution-control ordinances. These additions neither prolonged the life of the machine nor increased the residual value. Required: 1. If Lapar records depreciation expense under the straight-line method, how much is the depreciation expense for 2020? 2. Assume Lapar determines the machine has three significant components as shown below. If Lapar uses IFRS, what is the amount of depreciation expense that would be recorded?Oz Corporation has the following assets at year-end: Patents (net), 26,000; Land, 50,000; Buildings, 175,000; Accumulated Depreciation: Buildings, 57,500; Investment in Held-to-Maturity Bonds, 12,000; Equipment, 95,000; and Accumulated Depreciation: Equipment, 25,000. Prepare the property, plant, and equipment section of Ozs year-end balance sheet.On May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated service life of 5 years and zero residual value. Assume that the straight-line depreciation method is used. Required: Compute the depreciation expense for 2019 for each of the following four alternatives: 1. Horan computes depreciation expense to the nearest day. (Use 12 months of 30 days each and round the daily depreciation rate to 2 decimal places.) 2. Horan computes depreciation expense to the nearest month. Assets purchased in the first half of the month are considered owned for the whole month. 3. Horan computes depreciation expense to the nearest whole year. Assets purchased in the first half of the year are considered owned for the whole year. 4. Horan records one-half years depreciation expense on all assets purchased during the year.
- Depreciation Methods Nickle Company purchased three identical assets for 17,000 on January 2, 2019. Each asset has an expected residual value of 1,000. The depreciation expense for 2019 and 2020 is shown below for three assets: Required: 1. Next Level Which depreciation method is the company using for each asset? 2. Compute the depreciation expense for 2021 and 2022 for each asset.The draft balance sheet of Tere Corporation as of December 31, 2019 reported the net property, plant and equipment at P110,000,000. Details of the amount follow: Land at cost P10,000,000Building at cost P50,000,000Less accumulateddepreciation at 12/31/18 (20,000,000) 30,000,000Plant at cost 94,500,000Less accumulateddepreciation at 12/31/18 (24,500,000) 70,000,000 110,000,000The following matters are relevant:• On 30 June 2019, Tere terminated the production of one of its product lines. From this date, the plant used to manufacture the product has been actively marketed at an advertised price of P4.2 million which is considered realistic. Assume that this plant qualified as held for sale in accordance withPFRS 5. It is…At 30 June 2022, Boxes Ltd reported the following assets. Land $100 000 Plant $500 000 Accumulated Depreciation (100 000) Goodwill 16 000 Inventories 80 000 Cash 4 000 All assets are measured using the cost model. At 30 June 2022, the recoverable amount of the entity, considered to be a single CGU, was $544 000. For the period ending 30 June 2023, the depreciation charge on plant was $36 800. If the plant had not been impaired the charge would have been $50 000.. At 30 June 2023, the recoverable amount of the entity was calculated to be $26 000 greater than the carrying amount of the assets of the entity. As a result, Boxes Ltd recognised a reversal of the previous year’s impairment loss. The journal entry relating to impairment reversal is a. Reversal of impairment is not allowed b. Accum. impairment losses – Land Dr 5…