Property, Plant, and Equipment $ 350,000 180,000 1,500,000 1,158,000 150,000 Accumulated Depreciation Land Land improvements Building Machinery and equipment Automobiles $ 45,000 350,000 405,000 112,000
Pell Corporation's Property, Plant, and Equipment and
Depreciation
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:
1. 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.
2. On March 31, 2019, a machine purchased for $58,000 on January 3, 2015, was sold for $36,500.
3. 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.
4. 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.
5. 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:
1. Prepare a schedule analyzing the changes in each of the plant
assets during 2019, with detailed supporting computations.
Disregard the related Accumulated Depreciation accounts.
2. For each asset classification, prepare a schedule showing
depreciation expense for the year ended December 31, 2019.
3. 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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