Question

Problem 10-3 (Algo) Acquisition costs [LO10-1, 10-4, 10-6] The plant asset and accumulated depreciation accounts of Pell Corporation had the following balances at December 31, 2020 Accumulated Depreciation $ 54,000 359,000 414,000 121,000 Plant Asset Land 440,000 225,000 1,950,000 1,176,000 195,000 Land improvements Building Equipment Automobiles Transactions during 2021 were as follows: a. On January 2, 2021. equipment were purchased at a total invoice cost of $305,000. which included a $6.400 charge for freight. Installation costs of $36,000 were incurred. b. 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 $28.000. The fair value of the building on the day of the donation was $19,000. c. On May 1, 2021, expenditures of $59,000 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. d. On November 1, 2021. Pell acquired a tract of land with an existing building in exchange for 10,0o0 shares of Pell's common stock that had a market price of $37 per share. Pell paid legal fees and title insurance totaling $32.000. Shortly after acquisition, the building was razed at a cost of $44,000 in anticipation of new building construction in 2022 e. On December 31, 2021, Pell purchased a small storage building by giving $16.150 cash and an old automobile purchased for $22,500 in 2014. Depreciation on the old automobile recorded through December 31, 2021, totaled $14.400. The fair value of the old automobile was $4,650. Required: Prepare a schedule analyzing the changess in each of the plant assets during 2021. PELL CORPORATION Analysis of Changes in Plant As sets For the Year Ended December 31, 2021 Balance Balance 12/31/2020 Increase Decrease 12/31/2021 Land 440,000 Land improvenments 225,000 Building 1,950,000 1,176,000 Equipment Automobiles 195,000 Totals 3,086,000

Answer 1

In this Sum, I didn't consider accumulated depreciation and depreciation due to a lack of details on the date of purchase and depreciation percentage of each and individual assets.

Hence Increase and Decrease Assets only for Cost Price of assets, but not Book Value.

Pell Corporation Analysis in Change of Plant Assets For the year end of 31 Dec 2021 Balance Balance Particulars 12/31/2020 Increase Decrease 12/31/2021 Land 440000 402000 842000 Land Improvement 225000 44000 269000 Building 1 1950000 43250 1993250 305000 Equipments Automobiles 1176000 195000 3986000 22500 22500 1481000 172500 4757750 794250 Transaction Analysis A). On January 2, 2021. Equipment were purchase for 3,05,000/- (included Freigh 6400 & Installatin Cost 36,000/- "Eligible for Cap Exp) so, total 3,05,000/- will increase in Equpment A/c. B). On March 31, 2021. Small Storage building was donated to Company which orginaly purchase for 28,000/-, but lack of book value, its taken with fair value on the day for 19,000/- will increase building A/c. c). On May 1, 2021 Expenditure of 59,000/- were made for repaving parking lot, but it does't change life span and productivity of assets. Its considerd ordinary maintanance expenses and its does't change any of plant assets value. c). On November 1, Company acqired trackt of Land in exchange of 10000 commen shares at the market price of 37 per Shares (10000*37=370000/-) +Legal Price (32000/-) and he spend 44000/- for razed old building. So total 402000/- can capitalized in Land account & 44000/- can capitalized in land improvement account. D). On December 31, 2021, Pell Purchase Small building for cash paid (16150/-)+Old Machinery Exchange book value of (Purchase Price (22500)-Accumulated Depreciation (14400)=8100, total effective price (16150+8100)=24250/- increase in Building A/c. Exchang assets purchase value 22500/- decrease in Automobile AC

Hence.

Increase

Land = 402000/-

Land Improvement = 44000/-

Building = 43250/-

Equipment = 305000/-

Decrease

Automobiles = 22500/-

Pell Corporation Analysis in Change of Plant Assets For the year end of 31 Dec 2021 Balance Balance Particulars 12/31/2020 Increase Decrease 12/31/2021 Land 440000 402000 842000 Land Improvement 225000 44000 269000 Building 1 1950000 43250 1993250 305000 Equipments Automobiles 1176000 195000 3986000 22500 22500 1481000 172500 4757750 794250 Transaction Analysis A). On January 2, 2021. Equipment were purchase for 3,05,000/- (included Freigh 6400 & Installatin Cost 36,000/- "Eligible for Cap Exp) so, total 3,05,000/- will increase in Equpment A/c. B). On March 31, 2021. Small Storage building was donated to Company which orginaly purchase for 28,000/-, but lack of book value, its taken with fair value on the day for 19,000/- will increase building A/c. c). On May 1, 2021 Expenditure of 59,000/- were made for repaving parking lot, but it does't change life span and productivity of assets. Its considerd ordinary maintanance expenses and its does't change any of plant assets value. c). On November 1, Company acqired trackt of Land in exchange of 10000 commen shares at the market price of 37 per Shares (10000*37=370000/-) +Legal Price (32000/-) and he spend 44000/- for razed old building. So total 402000/- can capitalized in Land account & 44000/- can capitalized in land improvement account. D). On December 31, 2021, Pell Purchase Small building for cash paid (16150/-)+Old Machinery Exchange book value of (Purchase Price (22500)-Accumulated Depreciation (14400)=8100, total effective price (16150+8100)=24250/- increase in Building A/c. Exchang assets purchase value 22500/- decrease in Automobile AC