Question

At December 31, 2020, Cord Company's plant asset and accumulated depreciation and amortization accounts had balances as follows: Category Land Buildings Equipment Automobiles and trucks Leasehold improvements Land improvements Plant Asset $ 178,000 1,650,000 1,275,000 175,000 Accumulated Depreciation and Amortization $ - 331,900 320,500 103,325 222,000 111,000 Depreciation methods and useful lives: Buildings—150% declining balance; 25 years. Equipment-Straight line; 10 years. Automobiles and trucks—200% declining balance; 5 years, all acquired after 2017. Leasehold improvements-Straight line. Land improvements-Straight line. Depreciation is computed to the nearest month and residual values are immaterial. Transactions during 2021 and other information: a. On January 6, 2021, a plant facility consisting of land and building was acquired from King Corp. in exchange for 28,000 shares of Cord's common stock. On this date, Cord's stock had a fair value of $50 a share. Current assessed values of land and building for property tax purposes are $195,000 and $585,000, respectively. b. On March 25, 2021, new parking lots, streets, and sidewalks at the acquired plant facility were completed at a total cost of $210,000. These expenditures had an estimated useful life of 12 years. c. The leasehold improvements were completed on December 31, 2017, and had an estimated useful life of eight years. The related lease, which would terminate on December 31, 2023, was renewable for an additional four-year term. On April 30, 2021, Cord exercised the renewal option. d. On July 1, 2021, equipment was purchased at a total invoice cost of $328,000. Additional costs of $10,000 for delivery and $53,000 for installation were incurred. e. On September 30, 2021, Cord purchased a new automobile for $12,800. f. On September 30, 2021, a truck with a cost of $24,300 and a book value of $9,600 on date of sale was sold for $11,800. Depreciation for the nine months ended September 30, 2021, was $2,160. g. On December 20, 2021, equipment with a cost of $18,500 and a book value of $3,050 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 2021. 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, 2021.

Answer 1

Balance Balance 31/12/2020 Decrease 31/12/2021 Increase Land 178000 350000 0 528000 Landimprovements 210000 0 210000 0 Buildings 2700000 1650000 1050000 Machinery and equipment 1275000 391000 18500 1647500 Automobiles and trucks 175000 12800 24300 163500 Leasehold improvements 222000 222000 0 0 3500000 5471000 2013800 42800 Calculations Fair Vale of Shares 28000*50 1400000 Land Building Total Current Assessed Values 195000 585000 780000 1400000 195000 1400000*585000/ /780000 Fair Value 780000 350000 1050000