Pell Corporation’s Property, Plant, and Equipment and Accumulated Depreciation accounts had the following balances at December 31, 2018: Property, Plant, and Equipment Accumulated Depreciation Land $ 350,000 $ — Land improvements 180,000 45,000 Building 1,500,000 350,000 Machinery and equipment 1,158,000 405,000 Automobiles 150,000 112,000 Depreciation method and useful lives: Land improvements: Straight-line; 15 years. Building: 150%-declining-balance; 20 years. Machinery and equipment: Straight-line; 10 years. Automobiles: 150%-declining-balance; 3 years. Depreciation is computed to the nearest month. No salvage values are recognized. Transactions during 2019: On January 2, 2019, machinery and 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 March 31, 2019, a machine purchased for $58,000 on January 3, 2015, was sold for $36,500. On May 1, 2019, expenditures of $50,000 were made to repave parking lots at Pell’s plant location. The work was necessitated by damage caused by severe winter weather. On November 2, 2019, Pell acquired a tract of land with an existing building in exchange for 10,000 shares of Pell’s $20 par common stock, which had a market price of $38 a share on this date. Pell paid legal fees and title insurance totaling $23,000. The last property tax bill indicated assessed values of $240,000 for land and $60,000 for building. Shortly after acquisition, the building was razed at a cost of $35,000 in anticipation of new building construction in 2020. On December 31, 2019, Pell purchased a new automobile for $15,250 cash and trade-in of an automobile purchased for $18,000 on January 1, 2018. The new automobile has a cash value of $19,000. Required: Prepare a schedule analyzing the changes in each of the plant assets during 2019, with detailed supporting computations. Disregard the related Accumulated Depreciation accounts. For each asset classification, prepare a schedule showing depreciation expense for the year ended December 31, 2019. Prepare a schedule showing the gain or loss from each asset disposal that Pell would recognize in its income statement for the year ended December 31, 2019

Pell Corporation’s Property, Plant, and Equipment and Accumulated Depreciation accounts had the following balances at December 31, 2018: Property, Plant, and Equipment Accumulated Depreciation Land $ 350,000 $ — Land improvements 180,000 45,000 Building 1,500,000 350,000 Machinery and equipment 1,158,000 405,000 Automobiles 150,000 112,000 Depreciation method and useful lives: Land improvements: Straight-line; 15 years. Building: 150%-declining-balance; 20 years. Machinery and equipment: Straight-line; 10 years. Automobiles: 150%-declining-balance; 3 years. Depreciation is computed to the nearest month. No salvage values are recognized. Transactions during 2019: On January 2, 2019, machinery and 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 March 31, 2019, a machine purchased for $58,000 on January 3, 2015, was sold for $36,500. On May 1, 2019, expenditures of $50,000 were made to repave parking lots at Pell’s plant location. The work was necessitated by damage caused by severe winter weather. On November 2, 2019, Pell acquired a tract of land with an existing building in exchange for 10,000 shares of Pell’s $20 par common stock, which had a market price of $38 a share on this date. Pell paid legal fees and title insurance totaling $23,000. The last property tax bill indicated assessed values of $240,000 for land and $60,000 for building. Shortly after acquisition, the building was razed at a cost of $35,000 in anticipation of new building construction in 2020. On December 31, 2019, Pell purchased a new automobile for $15,250 cash and trade-in of an automobile purchased for $18,000 on January 1, 2018. The new automobile has a cash value of $19,000. Required: Prepare a schedule analyzing the changes in each of the plant assets during 2019, with detailed supporting computations. Disregard the related Accumulated Depreciation accounts. For each asset classification, prepare a schedule showing depreciation expense for the year ended December 31, 2019. Prepare a schedule showing the gain or loss from each asset disposal that Pell would recognize in its income statement for the year ended December 31, 2019

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter8: Operating Assets: Property, Plant, And Equipment, And Intangibles

Section: Chapter Questions

Problem 8.1DC

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Pell Corporation’s Property, Plant, and Equipment and Accumulated Depreciation accounts had the following balances at December 31, 2018:

	Property, Plant, and Equipment	Accumulated Depreciation
Land	$ 350,000	$ —
Land improvements	180,000	45,000
Building	1,500,000	350,000
Machinery and equipment	1,158,000	405,000
Automobiles	150,000	112,000

Depreciation method and useful lives:

Land improvements: Straight-line; 15 years.
Building: 150%-declining-balance; 20 years.
Machinery and equipment: Straight-line; 10 years.
Automobiles: 150%-declining-balance; 3 years.
Depreciation is computed to the nearest month. No salvage values are recognized.

Transactions during 2019:

On January 2, 2019, machinery and 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 March 31, 2019, a machine purchased for $58,000 on January 3, 2015, was sold for $36,500.
On May 1, 2019, expenditures of $50,000 were made to repave parking lots at Pell’s plant location. The work was necessitated by damage caused by severe winter weather.
On November 2, 2019, Pell acquired a tract of land with an existing building in exchange for 10,000 shares of Pell’s $20 par common stock, which had a market price of $38 a share on this date. Pell paid legal fees and title insurance totaling $23,000. The last property tax bill indicated assessed values of $240,000 for land and $60,000 for building. Shortly after acquisition, the building was razed at a cost of $35,000 in anticipation of new building construction in 2020.
On December 31, 2019, Pell purchased a new automobile for $15,250 cash and trade-in of an automobile purchased for $18,000 on January 1, 2018. The new automobile has a cash value of $19,000.

Required:

Prepare a schedule analyzing the changes in each of the plant assets during 2019, with detailed supporting computations. Disregard the related Accumulated Depreciation accounts.

For each asset classification, prepare a schedule showing depreciation expense for the year ended December 31, 2019.
Prepare a schedule showing the gain or loss from each asset disposal that Pell would recognize in its income statement for the year ended December 31, 2019.

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