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Q1) Fells Point Company's plant asset and collected depreciation accounts had balances on December 31, 2008 given below:

 

Category

Plant Asset Account

Accumulated Depreciation

Land

$175,000

$0

Building

1,500,000

328,900

Machinery & Equipment

1.125,000

317,500

Automobiles & Trucks

172,000

100,325

Leasehold improvements

216,000

108,000

Land improvements

0

0

 

Depreciation methods and estimated useful lives:

 

Buildings: 150% declining balance, 25 years

 

Machinery & Equipment: Straight-line, 10 years

 

Automobiles & trucks: 150% declining balance, 5 years, all acquired after 2005

 

Leasehold improvements: Straight-line

 

Land improvements: Straight-line

 

Depreciation is computed to the nearest month and residual values are immaterial.

 

Transactions given below happened during 2009 and other information:

 

a. On January 6, a plant facility comprising of land and building were obtained from Keller Corporation in exchange for 25,000 shares of Fells Point common stock.  On this date, Fells Point's keenly traded stock had market price of $50 per share. Present assessed values of land and building are $187,500 and $562,500, respectively.

 

b. On March 25, parking lots, streets and sidewalks at new plant were finished at total cost of $192,000. These expenditures had the estimated useful life of 12 years.

 

c. Leasehold improvements were completed at December 31, 2005, and had the estimated useful life of 8 years. Lease has been renewed to December 31, 2013.

 

d. On July 1, machinery and equipment was purchased for a total invoice price of $325,000.  Additional costs of $10,000 for delivery and $50,000 for installation were incurred.

 

e. On August 30, Fells Point bought new automobile for $12,500.

 

f. On September 30, truck with cost of $24,000 and a carrying amount of $9,100 on date of sale was sold for $11,500. Depreciation Expense of $2,650 for the 9 months of 2007 hadn't yet been recorded.

 

g. On December 20, a machine with a cost of $17,000 and a carrying amount of $2,975 at the date of disposal was scrapped with cash recovery.

 

problems:

 

a. Prepare journal entries to record each of the transactions above.

 

b. Determine the carrying amount of each asset category at the end of 2009?

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M916894

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