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Accounting problems




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#50778 | Written in 18-Jul-2015

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