Question

Check my work At 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 improvements Land improvements Plant Asset $ 167, eee 1,100,000 725,000 164,000 200,000 320,909 309,500 92,325 100,000 Depreciation methods and useful lives: Buildings--150% declining balance: 25 years. Machinery and equipment-Straight line: 10 years. Automobiles and trucks-150% declining balance, 5 years, all 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: a. On January 6, 2018, a plant facility consisting of land and building was acquired from King Corp. in exchange for 17.000 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 $167,500 and $502,500, respectively. b. On March 25, 2018, new parking lots, streets, and sidewalks at the acquired plant facility were completed at a total cost of $144,000. These expenditures had an estimated useful life of 12 years. < Prey 11 of 11 Next

Answer 1

1. Analysis of changes in plant assets for the year

ending December 31, 2018

	Balance on 31/12/2017	Increase	Decrease	Balance on 31/12/2018
Land	$167,000	$212,500*	$0	$379,500
Land improvement	-	$144,000	$0	$144,000
Buildings	$1,100,000	$637,500*	$0	$1,737,500
Machinery and equipment	$725,000	$369,000**	$13,000	$1,081,000
Automobiles and trucks	$164,000	$11,700	$23,200	$152,500
Leasehold improvements	$200,000	$0	$0	$200,000
	$2,356,000	$1,374,700	$36,200	$3,694,500

* Land and buildings acquired against shares =17,000×$50 =$850,000

Land fair value =$850,000/670,000 ×167,500 =$212,500

Buildings= $850,000/670,000 ×502,500 =$637,500

** Machinery and equipment = $317,000+$10,000+$42,000 =$369,000

2. Depreciation and amortization expenses for the year ending December 31,2018

Land improvement(144,000/12)	$12,000
Buildings(1,737,500×6%)*	$104,250
Machinery and equipment (1,081,000/10)	$108,100
Automobiles and trucks (152,500×30%)**	$45,750
Leasehold improvements (200,000/8)	$25,000
Total depreciation and amortization expenses for 2018	$295,100

* Depreciation rate on building={(1/25)×100}×150%=6%

** Depreciation rate on automobiles and trucks ={(1/5)×100}×150% =30%

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