Question

ut ur die exchange. TAKING IT FURTHER What are the arguments in favour of recording gains and loss plant, and equipment as part of profit from operations? What are the arguments in are the arguments in favour of recording gains and losses on disposals of property, non-operating items? Pront from operations? What are the arguments in favour of recording them as Land P9-9B At January 1, 2017, Jaina Company, a public company, reported the following ment accounts: a company, a public company, reported the following property, plant, and equip Record property, plant, and equipment transactions; Accumulated depreciation-buildings prepare partial financial $12,100,000 Accumulated depreciation--equipment statements. LO 2,4,7) AP 15,000,000 Building 28,500,000 Equipment 48,000,000 4,000,000 Jaina uses straight-line depreciation for buildings and equipment, and its fiscal year end is December 31. The build- ings are estimated to have a 50-year life and no residual value; the equipment is estimated to have a 10-year useful life and no residual value. Interest on all notes is payable or collectible at maturity on the anniversary date of the issue. During 2017, the following selected transactions occurred: Apr. 1 Purchased land for $1.9 million. Paid $475,000 cash and issued a 10-year, 6% note for the balance. May 1 Sold equipment that cost $750,000 when purchased on January 1, 2010. The equipment was sold for $350,000 cash June 1 Sold land purchased on June 1, 1996, for $1.2 million. Received $380,000 cash and accepted a 6% note for the balance. The land cost $300,000. July 1 Purchased equipment for $1 million on account, terms n/60. Dec. 31 Retired equipment that cost $470,000 when purchased on December 31, 2010. Instructions (a) Record the above transactions. (b) Record any adjusting entries required at December 31, 2017, and update account balances. (C) Prepare the property, plant, and equipment section of Jaina's balance sheet at December 31, 2017 en de most comnanies use the cost model instead of the revaluation model to account

Answer 1

Credit Calculation Jaina Company Journal entries Date Account 1-Apr Land Cash Notes Payable Debit $ 1,900,000 $ $ 475,000 1,425,000 $ 25,000 '=750000 /10 yrs * 4/12 1-May Depreciation expense Accumulated Depreciation-Equipment $ 25,000 $ $ 350,000 550,000 1-May Cash Accumulated Depreciation Equipment Gain on disposal Equipment $ $ '=750000 /10 yrs * 7 yrs + 25000 150,000 Dep from 2010-2016 for 7 yrs 750,000 $ $ 380,000 820,000 =1,200,000-380,000 1-Jun Cash Notes Receivable Gain on disposal Land $ $ 900,000 300,000 $ 1,000,000 1-Jul Equipment Accounts Payable $ 1,000,000 $ 47,000 470000 /10 yrs 31-Dec Depreciation expense Accumulated Depreciation-Equipment $ 47,000 =470000/10 yrs * 6 yrs + 47000 31-Dec Accumulated Depreciation Equipment Loss on disposal Equipment $ $ 329,000 141,000 $ 470,000 Adjusting entries 31-Dec Depreciation expense Accumulated Depreciation-Building $ 570,000 "=28500000 /50 yrs $ 570,000 $ 4,728,000 31-Dec Depreciation expense Accumulated Depreciation-Equipment '=((48000000 - 750000 - 470000) /10 yrs) +(1000000 /10 yrs * 6/12) $ 4,728,000 $ 64,125 31-Dec Interest expense Interest payable $ '=1425000 *6% * 9/12 64,125 9 months from April 1 to Dec 31 $ 28,700 31-Dec Interest receivable Interest revenue $ =820000 *6% * 7/12 28,700 7 months from June 1 to Dec 31

Date Debit Date Credit Calculation Jaina Company T Accounts Date Debit Date Credit Land Op bal $ 4,000,000 1-Apr $ 1,900,000 1-Jun $ 300,000 Bal. $ 5,600,000 Equipment Op bal $ 48,000,000 1-Jul $ 1,000,000 1-May $ 750,000 31-Dec $ 470,000 Accum. Depr.- Equipment Op bal $15,000,000 1-May $ 550,000 1-May $ 25,000 31-Dec $ 329,000 31-Dec $ 47,000 31-Dec $ 4,678,000 31-Dec $ 50,000 =((48000000 - 750000 - 470000) /10 yrs) (1000000 /10 yrs * 6/12) Bal. $ 47,780,000 Building $ 28,500,000 Bal. $ 18,921,000 Accum. Depr.- Building Op bal $12,100,000 31-Dec $ 570,000 Op bal =28500000 /50 yrs Bal. $ 28,500,000 Bal. $12,670,000

Jaina Company Balance Sheet December 31. 2017 Less Property Plant & Equipment Land Buildings Accumulated Depreciation-Buildings Equipment Accumulated Depreciation Equipment Total Property Plant & Equipment $ 5,600,000 $ 28,500,000 $(12,670,000) $ 15,830,000 $ 47,780,000 $(18,921,000) $ 28,859,000 $ 50,289,000 Less