Question

Problem 11-2 Comprehensive problem; Chapters 10 and 11 [LO11-2, 11-4) Af 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 aprovements Land improvements Plant Asset $ 177,000 1,688, 1,225,000 174.000 139,90 319,5 112,eee Depreciation methods and useful lives Buildings--150decioning balance: 25 years Machinery and equipment Straight line 10 years. Automobiles and trucks--150% declining balance: 5 years, ail 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 On January 6, 2018, a plant facility consisting of land and building was acquired from King Corp. an exchange for 27000 shares of Cord's common stock On this date. Cord's stock had a fair value of $40 a share. Current assessed values of land and building for property tax purposes are $154,000 and 5615,000 respectively b. On March 25, 2018. new parking lots, streets, and sidewalks at the acquired plant facility were completed at a total cost of 5204,000. These expenditures had an estimated useful life of 12 years 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, wos renewable for an additional four-year term On April 30, 2018. Cord exercised the renewal option d On July 2018, machinery and equipment were purchased at a total voice cost of 5327000 Additional costs of $12.000 for delivery and $52.000 for installation were incurred e. On August 30, 2018 Cord purchased a new automobile for $12700 On September 30, 2018 a truck with a cost of $24.200 and a book value of $9.400 on date of sale was sold for $11.700 Depreciation for the nine months ended September 30, 2018, was $2115 On December 20, 2018, a machine with a cost of $18,000 and a book value of $3.025 at date of disposition was scrapped without cash recovery Required: 1. Prepare a schedule analyting 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 2010 Complete this question by entering your answers in the tabs below. Required 1 Required 2 For och set category, prepare a schedule showing depreciation or amortization expense for the year ended December 31, 2018. Do not found intermediate calculation Round your finla s te nearest whole dollar) CORD COMPANY Depreciation and Amor For the Year Ending December 11, 2018 Land improvements Machinery and up Tatal dupreciation and mortation < Required 1

I don't have much to add, just that I want to know how to answer the different depreciation methods used on requirement 2 of the question.

I don't have clarification as I only depreciate according to the instructions given in the problem however I did clarify needing the answers for requirement 2 of the problem. Clarification is such a broad term as there are many things I could clarify.

The information is given in the problem. Could you expound on what information besides what is in the problem?

Yes the building and declining balance depreciation.

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	177000	216000		393000
Land improvements		204000		204000
Buildings	1600000	864000		2464000
Machinery and equipment	1225000	391000	18000	1598000
Automobiles and trucks	174000	12700	24200	162500
Leashold improvements	220000			220000
	3396000	1687700	42200	5041500

NOTES:

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

              Fair value—27,000 shares of Cord common stock at $40 per share fair value = 1080000

Allocation in proportion to appraised values at date of exchange:

	Amount	% of Total
Land	154000	20% (154000/770000)
Building	616000	80% (616000/770000)
	770000

Land = 1080000*20% = 216000

Building = 1080000*80% = 864000

Machinery and equipment purchased 7/1/18:

Invoice cost	327000
Delivery cost	12000
Installation cost	52000
Total acquisition cost	391000

Part 2

CORD COMPANY

Depreciation and Amortization Expense

For the Year Ended December 31, 2018

Land Improvements:

Cost	204000
Straight-line rate (1 ÷ 12 years)	x 8 1/3%
Annual depreciation	17000
Depreciation on land improvements for 2018:
(3/25 to 12/31/18)	x ¾	12750

Buildings:

Book value, 1/1/18 ($1600000-330900)	1269100
Building acquired 1/6/18	864000
Total amount subject to depreciation	2133100
150% declining balance rate: (1 ÷ 25 years = 4% x 1.5)	X 6%	127986

Machinery and equipment:

Balance, 1/1/18	1225000
Straight-line rate (1 ÷ 10 years)	X 10%	122500
Purchased on 7/1/18	391000
Depreciation for one-half year	X 5%	19550
Depreciation on machinery and equipment for 2018		142050

Automobiles and trucks:

Book value, 1/1/18 ($174000-102325)	71675
Deduct 1/1/18 book value of truck sold on 9/30 ($9400 + 2115)	11515
Amount subject to depreciation	83190
150% declining balance rate: (1 ÷ 5 years = 20% x 1.5)	X 30%	24957
Automobile purchased 8/30/18	12700
Depreciation for 2018 (30% x 4/12)	X 10%	1270
Truck sold on 9/30/18 – depreciation (given)		2115
Depreciation on automobiles and trucks		28342

Leasehold improvements:

Book value, 1/1/18 ($220,000 - 110,000)	110000
Amortization period (1/1/18 to 12/31/22)	5
Amortization of leasehold improvements for 2018	22000