Question

The Thompson Corporation, a manufacturer of steel products, began operations on October 1, 2019. The accounting department of Thompson has started the fixed-asset and depreciation schedule presented below. You have been asked to assist in completing this schedule. In addition to ascertaining that the data already on the schedule are correct, you have obtained the following information from the company's records and personnel: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) a. Depreciation is computed from the first of the month of acquisition to the first of the month of disposition. b. Land A and Building A were acquired from a predecessor corporation. Thompson paid $912,500 for the land and building together. At the time of acquisition, the land had a fair value of $100,000 and the building had a fair value of $900,000. c. Land B was acquired on October 2, 2019, in exchange for 4,000 newly issued shares of Thompson's common stock. At the date of acquisition, the stock had a par value of $5 per share and a fair value of $35 per share. During October 2019, Thompson paid $11,400 to demolish an existing building on this land so it could construct a new building. d. Construction of Building B on the newly acquired land began on October 1, 2020. By September 30, 2021, Thompson had paid $310,000 of the estimated total construction costs of $400,000. Estimated completion and occupancy are July 2022. e. Certain equipment was donated to the corporation by the city. An independent appraisal of the equipment when donated placed the fair value at $20,000 and the residual value at $3,000. f. Equipment A's total cost of $108,000 includes installation charges of $650 and normal repairs and maintenance of $12,900. Residual value is estimated at $6,000. Equipment A was sold on February 1, 2021. g. On October 1, 2020, Equipment B was acquired with a down payment of $5,000 and the remaining payments to be made in 10 annual installments of $5,000 each beginning October 1, 2021. The prevailing interest rate was 9%.

Answer 1

Assets	Acquisition Date	Cost	Residual	Depreciation Method	Estimated life in years	Depreciation for year ended 9/30
						2020	2021
Land A	10/01/2019	48026	NA	Not applicatble	NA	NA	NA
Building A	10/01/2019	864474	86250	Straight Line	52	15000	15000
Land B	10/02/2019	151400	NA	Not applicatble	NA	NA	NA
Building B	Under Construction	310000 to date	-	Straight Line	30	-	NA
Donated Equipment	10/02/2019	20000	3000	200% Declining balance	10	4000	3200
Equipment A	10/02/2019	95100	6000	Sum of the year's digits	9	17820	5280
Equipment B	10/01/2020	37089	-	Straight Line	16	-	2318.031

Working
	Working		Cost of Asset	Estimated life in years	Working for useful life		Working for Depreciation
							2020		2021
Land A	912500 / 1900000 x 100000		48026	NA
Building A	912500 / 1900000 x 900000		864474	52	(864474-86250)/15000
Land B	(4000 x $35) + 11400		151400	NA
Building B	310000		310000	30
Donated Equipment	20000		20000	10			20000 x 1/10 x 200%		(20000-4000) x 1/10 x 200%
Equipment A	$108000 - $12900		95100	9			(95100-6000) x 9/45		(95100-6000) x 9/45 x 4/12
Equipment B	$5000 + ($5000 x 6.4177)		37089	16