Details of this Paper

ACC - P11-5 and P11-6 Week 5 Assignment

Description

solution


Question

Question;P 11-15 Property, plant, and equipment and intangible assets, comprehensive;The Thompson Corporation, manufacturer of steel products, began operations on October 1, 2009. The accounting department of Thompson has started the fixed- asset and depreciation schedule presented below. You have been asked to assist in completing this schedule. In addition to ascertaining that the data already on the schedule are correct, you have obtained the following information from the company?s records and personnel;a. Depreciation is computed from the first of the month acquisition to the first of the month of disposition.;b. Land A and Building A were acquired from a predecessor corporation. Thompson paid 812,000 for the land and building together. At the time of acquisition, the land had a fair value of 72,000 and the building had a fair value of 828,000.;c. Land b was acquired on October 2, 2009, in exchange for 3,000 newly issued shares of Thompson?s common stock. At the date of acquisition, the stock had a par value of $5 per share and a fair value of $25 per share. During October 2009, Thompson paid $10,400 to demolish an existing building on this land so it could construct a new building.;d. Construction of Building B on the newly acquired land began on October 1, 2010. By September 30, 2011, Thompson had paid $210,000 of the estimated total construction costs of $300,000. Estimated completion and occupancy are July 2012.;e. E. Certain equipment was donated to the corporation by the city. An independent appraisal of the equipment when donated placed the fair value of $16,000 and the residual value at $2,000.;f. Machine A?s total cost of $110,000 includes installation charges of $550 and normal repairs and maintenance of $11,000. Residual value is estimated at 5,500. Machine A was sold on February 1, 2011.;g. On October 1, 2010, Machine B was acquired with a down payment of $4,000 and the remaining payments to be made in 10 annual installments of $4,000 each beginning October 1, 2011. The prevailing interest rate was 8%.;Fixed Asset and Depreciation Schedule;For Fiscal Years Ended September 30, 2010 and September 30, 2011;Depreciation for;Year Ended 9/30;Assets;Acquisition Date;Cost;Residual;Depreciation Method;Estimated Life in Years;2010;2011;Land A;10/1/2009;(1);N/A;N/A;N/A;N/A;N/A;Building A;10/1/2009;(2);47,500;SL;(3);14,000;(4);Land B;10/2/2009;(5);N/A;N/A;N/A;N/A;N/A;Building B;under construction;210,000 to date;-;SL;30;-;(6);Donated Equipment;10/2/2009;(7);2,000;150% declining balance;10;(8);(9);Machine A;10/2/2009;(10);5,500;Sum-of-the-digits;10;(11);(12);Machine B;10/1/2010;(13);SL;15;(14);N/A= Not Applicable;Required:Supply the correct amount for each numbered item on the schedule. Round each answer to the nearest dollar. (AICPA adapted);P11-6 Depreciation methods: partial-year depreciation, sale of assets;On March 31, 2011, the Herzog Company purchased a factory complete with machinery and equipment. The allocation of the total purchase price of $1,000,000 to the various types of assets along with estimated useful lives and residual values are as follows;Assets;Cost;Estimated Residual Value;Estimated Useful Life in Years;Land;100,000;N/A;N/A;building;500,000;none;25;Machinery;240,000;10% of cost;8;Equipment;160,000;13,000;6;Total;1,000,000;On June 28, 2012, machinery included in the March 31, 2011, purchase that cos $100,000 was sold for $80,000. Herzog uses the straight-line depreciation method for buildings and machinery and the sum-of-the-years?-digits method for equipment. Partial-year depreciation is calculated based on the number of months an asset is in service.;Required;1. Compare depreciation expense on the building, machinery, and equipment for 2011.;2. Prepare journal entries to record (1) depreciation on the machinery sold on June 29, 2012, and (2) the sale of machinery.;3. Compute depreciation expense on the building, remaining machinery, and equipment for 2012.

 

Paper#44584 | Written in 18-Jul-2015

Price : $29
SiteLock