Question

Check my work At December 31, 2017. Cord Company's plant asset and accumulated depreciation and amortization accounts had balances as follows: Accumulated Depreciation and Amortization Category Land Buildings Machinery and equipment Automobiles and trucks Leasehold improvements Land improvements Plant Asset 5 176, 1.550, eee 1,125, cee 173.ee 215, ece 329,90 318.500 1e.000 Depreciation methods and useful lives Buildings-150% declining balance, 25 years. Machinery and equipment-Straight line: 10 years. Automobiles and trucks-150% declining balance: 5 years, all acquired after 2014 Leasehold improvements-Straight line. Land improvements-Straight line. Depreciation is computed to the nearest month and residual values are immaterial. Transactions during 2018 and other information a. On January 6, 2018, a plant facility consisting of land and building was acquired from King Corp. in exchange for 26,000 shares of Cord's common stock. On this date, Cord's stock had a fair value of $60 a share. Current assessed values of land and building for property tax purposes are $228,000 and $532000, respectively b. On March 25, 2018, new parking lots, streets, and sidewalks at the acquired plant facility were completed at a total cost of $198.000. These expenditures had an estimated useful life of 12 years c. The leasehold improvements were completed on December 31, 2014 and had an estimated useful life of eight years. The related lease, which would terminate on December 31, 2020, was renewable for an additional four-year term. On April 30, 2018. Cord exercised the renewal option. d. On July 1, 2018, machinery and equipment were purchased at a total invoice cost of $326,000. Additional costs of $11,000 for delivery and $51,000 for installation were incurred. c. On August 30, 2018, Cord purchased a new automobile for $12,600. 1. On September 30, 2018, a truck with a cost of $24,100 and a book value of $9.200 on date of sale was sold for $11.600. Depreciation for the nine months ended September 30, 2018, was $2070. 9. On December 20, 2018. a machine with a cost of $17,500 and a book value of $3,000 at date of disposition was scrapped without cash recovery Required: 1. Prepare a schedule analyzing the changes in each of the plant asset accounts during 2018. Do not analyze changes in accumulated depreciation and amortization 2. For each asset category, prepare a schedule showing depreciation or amortization expense for the year ended December 31 2018 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a schedule analyzing the changes in each of the plant asset accounts during 2011. Do not analyze changes in accumulated depreciation and amortization. CORD COMPANY Analysis of Changes in Pluit Assets For the Year Ending December 31, 2018 Balance Balanen 12/31/17 Increase Decrease 12/31/18 Land S 175.000 Land wprovements Bundings 1.550,000 Machinery and equipment 1.175.000 Automobiles and trucks 173.000 Leasehold improvements 218,000 33.292.000 Required )

Answer 1

Part 1

CORD COMPANY

Analysis of Changes in Plant Assets

For the Year Ending December 31, 2018

	Balance 12/31/17	increase	decrease	Balance 12/31/18
Land	176000	468000		644000
Land improvements		198000		198000
Buildings	1550000	1092000		2642000
Machinery and equipment	1175000	388000	17500	1545500
Automobiles and trucks	173000	12600	24100	161500
Leashold improvements	218000			218000
	3292000	2158600	41600	5409000

NOTES:

Plant facility acquired from King 1/6/18—allocation to Land and Building:

              Fair value—26,000 shares of Cord common stock at $60 per share fair value = 1560000

Allocation in proportion to appraised values at date of exchange:

	Amount	% of Total
Land	228000	30% (228000/760000)
Building	532000	70% (532000/760000)
	760000

Land = 1560000*30% = 468000

Building = 1560000*70% = 1092000

Machinery and equipment purchased 7/1/18:

Invoice cost	326000
Delivery cost	11000
Installation cost	51000
Total acquisition cost	388000

Part 2

CORD COMPANY

Depreciation and Amortization Expense

For the Year Ended December 31, 2018

Land Improvements:

Cost	198000
Straight-line rate (1 ÷ 12 years)	x 8 1/3%
Annual depreciation	16500
Depreciation on land improvements for 2018:
(3/25 to 12/31/18)	x ¾	12375

Buildings:

Book value, 1/1/18 ($1550000-329900)	1220100
Building acquired 1/6/18	1092000
Total amount subject to depreciation	2312100
150% declining balance rate: (1 ÷ 25 years = 4% x 1.5)	X 6%	138726

Machinery and equipment:

Balance, 1/1/18	1175000
Straight-line rate (1 ÷ 10 years)	X 10%	117500
Purchased on 7/1/18	388000
Depreciation for one-half year	X 5%	19400
Depreciation on machinery and equipment for 2018		136900

Automobiles and trucks:

Book value, 1/1/18 ($173000-101325)	71675
Deduct 1/1/18 book value of truck sold on 9/30 ($9200 + 2070)	11270
Amount subject to depreciation	82455
150% declining balance rate: (1 ÷ 5 years = 20% x 1.5)	X 30%	24884
Automobile purchased 8/30/18	12600
Depreciation for 2018 (30% x 4/12)	X 10%	1260
Truck sold on 9/30/18 – depreciation (given)		2070
Depreciation on automobiles and trucks		28214

Leasehold improvements:

Book value, 1/1/18 ($218,000 - 109,000)	109000
Amortization period (1/1/18 to 12/31/22)	5
Amortization of leasehold improvements for 2018	21800