The plant asset and accumulated depreciation accounts of Pell Corporation had the following balances at December 31, 2020:AccumulatedDepreciation0LandLand improvementsBuildingEquipmentAutomobilesPlant Asset$ 395,000193,5001,590,0001,248,000159,000Transactions during 2021 were as follows:$54,000395,000450,000116,500a. On January 2, 2021, equipment were purchased at a total invoice cost of $305,000, which included a $6,400 charge for freight.Installation costs of $36,000 were incurred.b. On March 31, 2021, a small storage building was donated to the company. The person donating the building originally purchased itthree years ago for $34,000. The fair value of the building on the day of the donation was $21,400.c. On May 1, 2021, expenditures of $59,000 were made to repave parking lots at Pell's plant location. The work was necessitated bydamage caused by severe winter weather. The repair doesn't provide future benefits beyond those originally anticipated.d. On November 1, 2021, Pell acquired a tract of land with an existing building in exchange for 10,000 shares of Pell's common stockthat had a market price of $47 per share. Pell paid legal fees and title insurance totaling $27,500. Shortly after acquisition, thebuilding was razed at a cost of $44,000 in anticipation of new building construction in 2022.e. On December 31, 2021, Pell purchased a small storage building by giving $17,500 cash and an old automobile purchased for$22,500 in 2014. Depreciation on the old automobile recorded through December 31, 2021, totaled $16,875. The fair value of theold automobile was $4,200. Required:For each asset classification, prepare a schedule showing depreciation for the year ended December 31, 2021, using the followingdepreciation methods and useful lives:Land improvements-Straight line; 15 years.Building-150% declining balance; 20 years.Equipment Straight line; 10 years.Automobiles-Units-of-production;$0.50 per mileDepreciation is computed to the nearest month and no residual values are used. Automobiles were driven 42,500 miles in 2021. (Donot round intermediate calculations and round your final answers to 2 decimal places.)X Answer is complete but not entirely correct.PELL CORPORATIONDepreciationFor the Year Ended December 31, 2021$Land ImprovementsBuildingEquipmentAutomobilesTotal depreciation for 202112,900.00✔1,633,100.00 x158,900.00136,500.00$ 1,941,400.00

calculation of depreciation are as follows

The plant asset and accumulated depreciation accounts of Pell Corporation had the following balances at December 31, 2020: Accumulated Depreciation 0 54,000 395,000 450,000 116,500 Land Land improvements Building Equipment Automobiles Plant Asset $ 395,000 193,500 1,590,000 1,248,000 159,000 Transactions during 2021 were as follows: $ a. On January 2, 2021, equipment were purchased at a total invoice cost of $305,000, which included a $6,400 charge for freight. Installation costs of $36,000 were incurred. b. On March 31, 2021, a small storage building was donated to the company. The person donating the building originally purchased three years ago for $34,000. The fair value of the building on the day of the donation was $21,400. c. On May 1, 2021, expenditures of $59,000 were made to repave parking lots at Pell's plant location. The work was necessitated by damage caused by severe winter weather. The repair doesn't provide future benefits beyond those originally anticipated. d. On November 1, 2021, Pell acquired a tract of land with an existing building in exchange for 10,000 shares of Pell's common stock

The plant asset and accumulated depreciation accounts of Pell Corporation had the following balances at December 31, 2020: Accumulated Depreciation 0 54,000 395,000 450,000 116,500 Land Land improvements Building Equipment Automobiles Plant Asset $ 395,000 193,500 1,590,000 1,248,000 159,000 Transactions during 2021 were as follows: $ a. On January 2, 2021, equipment were purchased at a total invoice cost of $305,000, which included a $6,400 charge for freight. Installation costs of $36,000 were incurred. b. On March 31, 2021, a small storage building was donated to the company. The person donating the building originally purchased three years ago for $34,000. The fair value of the building on the day of the donation was $21,400. c. On May 1, 2021, expenditures of $59,000 were made to repave parking lots at Pell's plant location. The work was necessitated by damage caused by severe winter weather. The repair doesn't provide future benefits beyond those originally anticipated. d. On November 1, 2021, Pell acquired a tract of land with an existing building in exchange for 10,000 shares of Pell's common stock

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 8P: At the beginning of 2020, Holden Companys controller asked you to prepare correcting entries for the...

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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.
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. 10,000
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?
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.
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. $224,000
On December 31, 2019, Vail Company owned the following assets: Vail computes depreciation and amortization expense to the nearest whole year. During 2020, Vail engaged in the following transactions: Required: 1. Check the accuracy of the accumulated depreciation balances at December 31, 2019. Round to the nearest whole dollar in all requirements. 2. Prepare journal entries to record the preceding events in 2020, as well as the year-end recording of depreciation expense. 3. Prepare an Accumulated Depreciation account for each category of assets, enter the beginning balance, post the journal entries from Requirement 2, and compute the ending balance.
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 Sorter Company purchased equipment for 200,000 on January 2, 2019. The equipment has an estimated service life of 8 years and an estimated residual value of 20,000. Required: Compute the depreciation expense for 2019 under each of the following methods: 1. straight-line 2. sum-of-the-years-digits 3. double-declining-balance 4. Next Level What effect does the depreciation of the equipment have on the analysis of rate of return?
Cost of Asset and Depreciation Method Heist Company purchased a machine on January 2, 2019, and uses the 150%-declining-balance depreciation method. The machine has an expected life of 10 years and an expected residual value of 5,000. The following costs relate to the acquisition and use of the machine during the first year of its operations: Required: 1. Compute the depreciation expense for 2019 and 2020. 2. Next Level What is the effect on the financial statements if the company used the straight-line method instead of the 150%-declining-balance method?
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
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.
At the beginning of 2020, Holden Companys controller asked you to prepare correcting entries for the following three situations: 1. Machine X was purchased for 100,000 on January 1, 2015. Straight-line depreciation has been recorded for 5 years, and the Accumulated Depreciation account has a balance of 45,000. The estimated residual value remains at 10,000, but the service life is now estimated to be 1 year longer than originally estimated. 2. Machine Y was purchased for 40,000 on January 1, 2018. It had an estimated residual value of 4,000 and an estimated service life of 8 years. It has been depreciated under the sum-of-the-years-digits method for 2 years. Now, the company has decided to change to the straight-line method. 3. Machine Z was purchased for 80,000 on January 1, 2019. Double-declining-balance depreciation has been recorded for 1 year. The estimated residual value is 8,000 and the estimated service life is 5 years. The computation of the depreciation erroneously included the estimated residual value. Required: Prepare any necessary correcting journal entries for each situation. Also prepare the journal entry for each situation to record the depreciation for 2020. Ignore income taxes.