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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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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 Oz’s year-end balance sheet.

To determine

Prepare the property, plant, and equipment section of O’s year-end balance sheet.

Explanation

Classified balance sheet: The main elements of balance sheet assets, liabilities, and stockholders’ equity are categorized or classified further into sections, and sub-sections in a classified balance sheet. Assets are further classified as current assets, long-term investments, property, plant, and equipment (PPE), and intangible assets. Liabilities are classified into two sections current and long-term. Stockholders’ equity comprises of common stock and retained earnings. Thus, the classified balance sheet includes all the elements under different sections.

Property, plant, and equipment: These assets are long lived economic resources which are owned by the company, these asset accounts are increased by the debits and decreased by the credits.  Thus, these asset accounts normally show debit balances (balance sheet).

Prepare the property, plant, and equipment section of O’s year-end balance sheet:

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O Corporation