Question

Problem 11-3 (Algo) Depreciation methods; partial periods Chapters 10 and 11 [LO11-2]

The plant asset and accumulated depreciation accounts of Pell Corporation had the following balances at December 31, 2020:

	Plant Asset				Accumulated Depreciation
Land	$	330,000			$	0
Land improvements		174,000				41,000
Building		1,460,000				330,000
Equipment		1,118,000				385,000
Automobiles		146,000				110,000

Transactions during 2021 were as follows:

1. On January 2, 2021, equipment were purchased at a total invoice cost of $240,000, which included a $5,100 charge for freight. Installation costs of $23,000 were incurred.
2. On March 31, 2021, a small storage building was donated to the company. The person donating the building originally purchased it three years ago for $21,000. The fair value of the building on the day of the donation was $15,000.
3. On May 1, 2021, expenditures of $46,000 were made to repave parking lots at Pell's plant location. The work was necessitated by damage caused by severe winter weather. The repair doesn't provide future benefits beyond those originally anticipated.
4. On November 1, 2021, Pell acquired a tract of land with an existing building in exchange for 10,000 shares of Pell’s common stock that had a market price of $34 per share. Pell paid legal fees and title insurance totaling $21,000. Shortly after acquisition, the building was razed at a cost of $31,000 in anticipation of new building construction in 2022.
5. On December 31, 2021, Pell purchased a small storage building by giving $14,250 cash and an old automobile purchased for $16,000 in 2014. Depreciation on the old automobile recorded through December 31, 2021, totaled $12,000. The fair value of the old automobile was $3,550.

Required:

For each asset classification, prepare a schedule showing depreciation for the year ended December 31, 2021, using the following depreciation methods and useful lives:

Land improvements—Straight line; 15 years.
Building—150% declining balance; 20 years.
Equipment—Straight line; 10 years.
Automobiles—Units-of-production; $0.50 per mile

Depreciation is computed to the nearest month and no residual values are used. Automobiles were driven 36,000 miles in 2021. (Do not round intermediate calculations and round your final answers to 2 decimal places.)

11,600.00 PELL CORPORATION Depreciation For the Year Ended December 31, 2021 Land Improvements $ Building Equipment Automobiles Total depreciation for 2021 $ 11,600.00

Answer 1

solution pell Corporation Depreciation for the year ended December 31, 2021 Amount ($) $22000 $85593.75 land improvements (4) Building (5) Equipment (6) Automobiles (7) $ 1381 DO $ 18000 Total Depreciation for 2021. $ 263593.75- korking : Analysis of changes in Assets. Before Depreciation Balance on 31/12/2021 Snere oude Decrease Balance on Bildec2020 330000 land 392000 722000 194000 land improvements Building Equipment Automobiles 174000 - 17800 1460000 4 taon) 15000 1118000 263000 1492800 1381000 3) 146000 16000 130000 3228000 687800 16000 3899500 Total

Camount) aut (8) 340000 Explanation of Amounts cost of land acquired (Nov, 2, 2021) pell stock exchanged (10000 x $24) legal fees and title insurance razing existing building 21000 31000 392000 fmont) (2) cost of small storage building (Det , 31,202 fair value of trade 3550 in 14250 cash paid 12800 amow($) cest 0f macliuery Oud equipment purchased on (02, ran :2021) 240000 23000 Invoice cost Installation cost 263000 Computation of Depreciation of Each Assets 2poo (4) Land Improvements amounts) 330000 cost on Tan, 2021 Les : Aleemulakd depmisation (41000) Depreciable value plus : Additions Deprecau voleu on 31, Dec, 2021 289000 Depreciation con straight line haus = 330000 - $ 22000 How to toles Olainat 15 years

5 on building original cost $ 1460000 Len : Occumulated depreciation (330000) $ 1130000 method. Depreciation on above on the basis of declining rate of depreciation : (Shaucht line basts ) 157 20 years. rate of (liven) under double deeling method is 39 150 s. x straight line rate of depreciation = 150..x 5 3) 7.5 84250 Deprecation en opening balance (41130000 X 7.50), ) Additions $843-75 (i) on 31 March 2021 $15000 in the above care depreciation shall be cal cualid from 31, March 2021 to 31, Dec, 2021) .eg amonths. (le, $15000 7,5, * ) i) on 31, December, 2021 - Mote equired (because amet is not used in Current year) $ 85593.737

(6) on Equipment $ 1118000 Original cost on straight line basis Depreciation on about Depreciation - Orignal cost - Resedaal value Estimated useful life 1118000 $111800 10 years. Abitions on 2, Jan, 2021 was 0 263000 (3) Here, depreciation on additions shall be calucted for entire year. $263000-0 Depreciation : =) 426300 to years. depreciation = Total $ 111800 & 426300 - 138100. (7) on automobiles Depreciation on unih of poodachon method is - (Cost - Residual valere.) x output of current period Estimated useful life. Eriven original wast per given Information Shall be computed is $146000 But, as depreciation on equipment as follows:

- units produced X amount pec unit - 36000 miles X 90.50 per mile. a & 18000 Computed on the basis of given information.) Nore. Depreciation on old automobile sold also Calculated for whole year because it was sold at the end of the year e, 31, Dec, 2021.
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