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Comprehensive Information for Blake Corporation’s property plant and equipment for 2007 is Account Balances at January 1 2007 Debit Credit Land $150000 Building 1200000 Accumulated

Comprehensive - Information for Blake Corporation’s property, plant, and equipment for 2007 is:

Account Balances at January 1, 2007

Debit

Credit

Land

$150,000

Building

1,200,000

Accumulated depreciation

$263,100

Machinery and equipment

900,000

Accumulated depreciation

250,000

Automotive equipment

115,000

Accumulated depreciation

84,600

Depreciation Method and Useful Life

Building: 150%-declining-balance; 25 years.

Machinery and equipment: Straight-line; 10 years.

Automotive equipment: Sum-of-the-years’-digits; 4 years.

Leasehold improvements: Straight-line.

The residual value of the depreciable assets is immaterial.

Depreciation is computed to the nearest month.

Transactions during 2007 and other information were as follows:

1. On January 2, 2007, Blake purchased a new car for $10,000 cash and a trade-in of a two-year-old car with a cost of $9,000 and a book value of $2,700. The new car has a cash price of $12,000; the market value of the trade-in is not known.

2. On April 1, 2007, a machine purchased for $23,000 on April 1, 2002 was destroyed by fire. Blake recovered $15,500 from its insurance company.

3. On May 1, 2007, costs of $168,000 were incurred to improve leased office premises. The leasehold improvements have a useful life of eight years. The related lease, which terminates on December 31, 2013, is renewable for an additional six-year term. The decision to renew will be made in 2013 based on office space needs at that time.

4. On July 1, 2007, machinery and equipment were purchased at a total invoice cost of $280,000; additional costs of $5,000 for freight and $25,000 for installation were incurred.

5. Blake determined that the automotive equipment comprising the $115,000 balance at January 1, 2007 would have been depreciated at a total amount of $18,000 for the year ended December 31, 2007.

Required

1. For each asset classification, prepare schedules showing depreciation and amortization expense, and accumulated depreciation and amortization that would appear on Blake’s income statement for the year ended December 31, 2007 and on the balance sheet at December 31, 2007, respectively.

2. Prepare a schedule showing the gain or loss from disposal of assets that would appear in Blake’s income statement for the year ended December 31, 2007.

3. Prepare the property, plant, and equipment section of Blake’s December 31, 2007 balance sheet.

May 21 2020 View more View Less

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