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Comprehensive The Plant Asset and Accumulated Depreciation accounts of Pell Corporation had the following balances at December 31 2006 Plant Asset Accumulated Depreciation Land

Comprehensive - The Plant Asset and Accumulated Depreciation accounts of Pell Corporation had the following balances at December 31, 2006:

Plant
Asset

Accumulated
Depreciation

Land

$350,000

$ —

Land improvements

180,000

45,000

Building

1,500,000

350,000

Machinery and equipment

1,158,000

405,000

Automobiles

150,000

112,000

Depreciation method and useful lives:

  • Land improvements: Straight-line; 15 years.
  • Building: 150%-declining-balance; 20 years.
  • Machinery and equipment: Straight-line; 10 years.
  • Automobiles: 150%-declining-balance; 3 years.
  • Depreciation is computed to the nearest month. No salvage values are recognized. Transactions during 2007:

1. On January 2, 2007, machinery and equipment were purchased at a total invoice cost of $260,000, which included a $5,500 charge for freight. Installation costs of $27,000 were incurred.

2. On March 31, 2007, a machine purchased for $58,000 on January 3, 2003 was sold for $36,500.

3. On May 1, 2007, expenditures of $50,000 were made to repave parking lots at Pell’s plant location. The work was necessitated by damage caused by severe winter weather.

4. On November 2, 2007, Pell acquired a tract of land with an existing building in exchange for 10,000 shares of Pell’s $20 par common stock, which had a market price of $38 a share on this date. Pell paid legal fees and title insurance totaling $23,000. The last property tax bill indicated assessed values of $240,000 for land and $60,000 for building. Shortly after acquisition, the building was razed at a cost of $35,000 in anticipation of new building construction in 2008.

5. On December 31, 2007, Pell purchased a new automobile for $15,250 cash and trade-in of an automobile purchased for $18,000 on January 1, 2006. The new automobile has a cash value of $19,000.

Required

1. Prepare a schedule analyzing the changes in each of the plant assets during 2007, with detailed supporting computations. Disregard the related accumulated depreciation accounts.

2. For each asset classification, prepare a schedule showing depreciation expense for the year ended December 31, 2007.

3. Prepare a schedule showing the gain or loss from each asset disposal that Pell would recognize in its income statement for the year ended December 31, 2007.

May 21 2020 View more View Less

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