25-18 Leasehold

Land Building Machinery

improvements
Balances, Jan. 1 1,500,000 4,000,000 500,000 1,000,000
Acquisition of land #621
Purchase price 3,000,000
Commission 60,000
Clearing cost 15,000
Saleof timber and gravel (5,000)
Acquisition of land #622
Purchase price 4,000,000
Cost of demolition 300,000
New building:
Construction cost 5,000,000
Excavation fee 50,000
Architectural design 150,000
Building permit 40,000
Improvements:
Electrical work 350,000
Construction extension 400,000
(800,000*1/2)
Improvements on office space 650,000
Purchase of new machine:
Invoice price 1,750,000
Freight 20,000
Unloading charge 30,000
Balances,Dec. 31 8,870,000 9,240,000 1,900,000 2,800,000
The 3rd tract of land should be presented as current asset bcoz it is held for sale
28-19 Land
Land improvement Building Machinery
s
Balances, Jan. 1 3,500,000 900,000 7,000,000 1,500,000
Land acquired 1,250,000
Issuance of share capital:
12/36*4,500,000 1,500,000
24/36*4,500,000 3,000,000
New Machinery 3,400,000
New parking lot,street&sidewalk 750,000
Machinery sold (500,000)
Balances,Dec. 31 6,250,000 1,650,000 10,000,000 4,400,000
25-32
Cost paid(896,000-96,000) 800,000
Cost of transporting machine 30,000
Installation cost 50,000
Testing cost 40,000
Safety rails and platform 60,000
Water device 80,000
Cost of adjustment 75,000
Estimated dismantling cost 65,000
Total cost of machine 1,200,000
25-33
Second hand market value 2,400,000
Overhaul and repairs 150,000
Installation 80,000
Testing 110,000
Hauling 10,000
Safety devicce 250,000
Total amount to be capitalized 3,000,000
25-34
a. Materials 600,000
Labor 400,000
Installation 60,000
Trial run 30,000
Discount (40,000)
Overhead 150,000
Total cost of machinery 1,200,000
b. Adjusting entries:
1. Loss on retirement of old machinery 6,000
Machinery(20k-14k) 6,000
2. Purchase discount 40,000
Machinery 40,000
3. Machinery 150,000
Factory overhead 150,000
4. Profit on construction 100,000
Machinery 100,000
5. Tools 90,000
Machinery 90,000
6. Depreciation-tools 10,000
Tools(90k/3*4/12) 10,000
7. Machinery 128,600
Accumulated dep. 40,000
Dep. - Machinery 88,600
Depreciation recorded 128,600
Corrected depreciation(1.2M/10*4/12) (40,000)
Overdepreciation 88,600
25-35
1. Accumulated depreciation 400,000
Loss on retirement of building 1,600,000
Building 2,000,000
Building 2,500,000
Cash 2,500,000
Depreciation(8.1M/20) 405,000
Accumulated dep. 405,000
Building(9M+2.5M-2M) 9,500,000
Accumulated depreciation(1.8M-400K) (1,400,000)
Carrying amount 8,100,000
2. Accumulated dep.(1.96M*20%) 392,000
Loss on retirement of building 1,568,000
Building(2.5M*.784) 1,960,000
Building 2,500,000
Cash 2,500,000
Dep. (8,132,000/20) 406,600
Accumulated dep. 406,600
Building(9M-1.96M+2.5M) 9,540,000
Accumulated dep.(1.8M-392K) (1,408,000)
Carrying amount 8,132,000
25-36
1. Machinery 5,000,000
Cash 5,000,000
2. Depreciation 450,000
Accumulated dep. 450,000
3. Depreciation(3.6M/6) 600,000
Accumulated dep. 600,000
Cost 5,000,000
Accumulated depreciation:
2013 450,000
2014 450,000 (900,000)
Carrying amount 4,100,000
Residual value (500,000)
Remaining depreciable cost-1/1/2015 3,600,000
4. Machinery 300,000
Cash 300,000
5. Depreciation(3.3M/5) 660,000
Accumulated dep. 660,000
Cost 5,300,000
Accumulated dep.(900k+600K) (1,500,000)
Carrying amount-1/1/2016 3,800,000
Residual value (500,000)
Remaining depreciable cost-1/1/2016 3,300,000
25-37
a. Annual depreciation(8.4M/30) 280,000
Age of building(7M/280k) 25 yrs.
b. Building 2,500,000
Cash 2,500,000
c. Building(8.4M+2.5M) 10,900,000
Less:A/D (7,000,000)
Carrying amount 3,900,000
d. Depreciation(3.9M/15) 260,000
Accumulated depreciation 260,000
Original life 30
Less: Expired life (25)
Remaining useful life,beg. Of current yr. 5
Add:extension in life 10
Revised useful life 15
25-38
1. Building 10,500,000
Cash 10,500,000
2. Depreciation 200,000
Accumulated depreciation 200,000
3. Building 3,000,000
Cash 3,000,000
Accumulated dep.(2.5M/50*2) 100,000
Loss on retirement of building 2,400,000
Cash 2,500,000
4. Depreciation(10.7M-500k/48) 212,500
Accumulated depreciation 212,500
Building(10.5M+3M-2.5M) 11,000,000
Accumulated dep.(400k-100k) (300,000)
Carrying amount - 1/1-2015 10,700,000
25-39
1. Discount on bonds payable 500,000
Machinery 500,000
Interest expense(500k/10*9/12) 37,500
Discount on notes payable 37,500
Accumulated depreciation 75,000
Depreciation 75,000
Depreciation for 9 mos. 600,000
Depreciation for 12 mos.(600k/9/12) 800,000
Depreciation cost(800k*5yrs.) 4,000,000
Per book Adjusted
Cost 5,000,000 4,500,000
Less: Residual value 1,000,000 1,000,000
Depreciable amount 4,000,000 3,500,000

Correct dep. For 9 mos. (3.5M/5*9/12) 525,000

Less: Depreciation recorded (600,000)
Overstatement (75,000)
2. Interest expense 300,000
Machinery(3.5M-3.2M) 300,000
Machinery 150,000
Freight in 150,000
Accumulated depreciation 30,000
Depreciation 30,000
Depreciation per book 700,000
Correct depreciation(3.35M/5) (670,000)
Overstatement 30,000
3. Loss on exchange 390,000
Machinery 390,000
Cost per book 3,000,000
Correct cost
Trade in value 150,000
Add:Cash paid 2,460,000 (2,610,000)
Overstatement 390,000
Trade in value 150,000
Less: Carrying amount (540,000)
Loss on exchange (390,000)
4. Allowance for doubtful accounts 840,000
Loss on exchange-A/R 60,000
Treasury share 900,000

Per book
Machinery 4,200,000
Accounts receivable 4,200,000
Treasury shares 4,200,000
Machinery 4,200,000
Should be
Machinery 3,300,000
Allowance for doubtful accounts(4.2M*20%) 840,000
Loss on accounts receivable 60,000
Accounts receivable 4,200,000
Treasury shares 3,300,000
Machinery 3,300,000