ACCT 211 Homework 8 Accounting for Long-Term Assets Problems Assignment solutions complete answers

ACCT 211 Homework 8 Accounting for Long-Term Assets Problems Assignment solutions complete answers 

 

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Timberly Construction makes a lump-sum purchase of several assets on January 1 at a total cash price of $830,000. The estimated market values of the purchased assets are building, $423,200; land, $285,200; land improvements, $55,200; and four vehicles, $156,400. 

Required:
1-a. Allocate the lump-sum purchase price to the separate assets purchased.
1-b. Prepare the journal entry to record the purchase.
2. Compute the first-year depreciation expense on the building using the straight-line method, assuming a 15-year life and a $31,000 salvage value.
3. Compute the first-year depreciation expense on the land improvements assuming a five-year life and double-declining-balance depreciation.

4. Compared to straight-line depreciation, does accelerated depreciation result in payment of less total taxes over the asset’s life?

 

A machine costing $211,800 with a four-year life and an estimated $17,000 salvage value is installed in Luther Company’s factory on January 1. The factory manager estimates the machine will produce 487,000 units of product during its life. It actually produces the following units: 121,600 in Year 1, 123,700 in Year 2, 120,000 in Year 3, 131,700 in Year 4. The total number of units produced by the end of Year 4 exceeds the original estimate—this difference was not predicted. Note: The machine cannot be depreciated below its estimated salvage value.

Required:
Compute depreciation for each year (and total depreciation of all years combined) for the machine under each depreciation method. (Round your per unit depreciation to 2 decimal places. Round your answers to the nearest whole dollar.)

 

On January 1, Mitzu Company pays a lump-sum amount of $2,750,000 for land, Building 1, Building 2, and Land Improvements 1. Building 1 has no value and will be demolished. Building 2 will be an office and is appraised at $649,000, with a useful life of 20 years and a $75,000 salvage value. Land Improvements 1 is valued at $560,500 and is expected to last another 19 years with no salvage value. The land is valued at $1,740,500. The company also incurs the following additional costs.
 

Cost to demolish Building 1
$ 342,400
Cost of additional land grading
191,400
Cost to construct Building 3, having a useful life of 25 years and a $400,000 salvage value
2,282,000
Cost of new Land Improvements 2, having a 20-year useful life and no salvage value
168,000
Required:
1. Allocate the costs incurred by Mitzu to the appropriate columns and total each column.

2. Prepare a single journal entry to record all the incurred costs assuming they are paid in cash on January 1.

3. Using the straight-line method, prepare the December 31 adjusting entries to record depreciation for the first year these assets were in use.

 

Champion Contractors completed the following transactions involving equipment.
 
Year 1

January 1
Paid $274,000 cash plus $10,960 in sales tax and $1,600 in transportation (FOB shipping point) for a new loader. The loader is estimated to have a four-year life and a $27,400 salvage value. Loader costs are recorded in the Equipment account.
January 3
Paid $4,000 to install air conditioning in the loader to enable operations under harsher conditions. This increased the estimated salvage value of the loader by another $1,200.
December 31
Recorded annual straight-line depreciation on the loader.
 
Year 2

January 1
Paid $4,300 to overhaul the loader’s engine, which increased the loader’s estimated useful life by two years.
February 17
Paid $1,075 for minor repairs to the loader after the operator backed it into a tree.
December 31
Recorded annual straight-line depreciation on the loader.
 
Required:
Prepare journal entries to record these transactions and events.

 

Yoshi Company completed the following transactions and events involving its delivery trucks.
 
Year 1

January 1
Paid $22,015 cash plus $1,935 in sales tax for a new delivery truck estimated to have a five-year life and a $2,300 salvage value. Delivery truck costs are recorded in the Trucks account.
December 31
Recorded annual straight-line depreciation on the truck.

Year 2

December 31
The truck’s estimated useful life was changed from five to four years, and the estimated salvage value was increased to $2,850. Recorded annual straight-line depreciation on the truck.

Year 3

December 31
Recorded annual straight-line depreciation on the truck.
December 31
Sold the truck for $5,500 cash.

Required:
1-a. Calculate depreciation for Year 2.
1-b. Calculate book value and gain (loss) for sale of Truck on December 31, Year 3.
1-c. Prepare journal entries to record these transactions and events.

 

Onslow Company purchased a used machine for $192,000 cash on January 2. On January 3, Onslow paid $8,000 to wire electricity to the machine. Onslow paid an additional $1,600 on January 4 to secure the machine for operation. The machine will be used for six years and have a $23,040 salvage value. Straight-line depreciation is used. On December 31, at the end of its fifth year in operations, it is disposed of.

Required:
1. Prepare journal entries to record the machine's purchase and the costs to ready it for use. Cash is paid for all costs incurred.

2. Prepare journal entries to record depreciation of the machine at December 31.

3. Prepare journal entries to record the machine’s disposal under each separate situation: (a) it is sold for $22,500 cash and (b) it is sold for $90,000 cash.

 

On July 23 of the current year, Dakota Mining Company pays $6,696,720 for land estimated to contain 9,432,000 tons of recoverable ore. It installs and pays for machinery costing $471,600 on July 25. The company removes and sells 483,750 tons of ore during its first five months of operations ending on December 31. Depreciation of the machinery is in proportion to the mine's depletion as the machinery will be abandoned after the ore is mined.

Required:
Prepare entries to record the following.
(a) The purchase of the land.
(b) The cost and installation of machinery.
(c) The first five months' depletion assuming the land has a net salvage value of zero after the ore is mined.
(d) The first five months' depreciation on the machinery.

(e) If the machine will be used at another site when extraction is complete, how would we depreciate this machine?