Reference no: EM131939547
Problem - The plant asset and accumulated depreciation accounts of Pell Corporation had the following balances at December 31, 2015:
|
|
Plant Asset
|
Accumulated Depreciation
|
|
Land
|
$430,000
|
$ -
|
|
Land improvements
|
220,000
|
53,000
|
|
Building
|
1,900,000
|
358,000
|
|
Machinery and equipment
|
1,174,000
|
413,000
|
|
Automobiles
|
190,000
|
120,000
|
Transactions during 2016 were as follows:
a. On January 2, 2016, machinery and equipment were purchased at a total invoice cost of $300,000, which included a $6,300 charge for freight. Installation costs of $35,000 were incurred.
b. On March 31, 2016, a machine purchased for $66,000 in 2012 was sold for $44,500. Depreciation recorded through the date of sale totaled $25,850.
c. On May 1, 2016, expenditures of$58,000 were made to repave parking lots at Pell's plant location. The work was necessitated by damage caused by severe winter weather.
d. On November 1, 2016, Pell acquired a tract of land with an existing building in exchange for 10,000 shares of Pell's common stock that had a market price of $36 per share. Pell paid legal fees and title insurance totaling $31,000. Shortly after acquisition, the building was razed at a cost of $43,000 in anticipation of new building construction in 201?.
e. On December 31, 2016, Pell purchased a new automobile for $16,050 cash and trade-in of an old automobile purchased for $22,000 in 2012. Depreciation on the old automobile recorded through December 31, 2016, totaled $14,300. The fair value of the old automobile was $4,550.
Required:
1. Prepare a schedule analyzing the changes in each of the plant assets during 2016.
2. Prepare a schedule showing the gain or loss from each asset disposal that would be recognized in Pell's income statement for the year ended December 31, 2016.