Question

At December 31, 2020, Cord Company's plant asset and accumulated depreciation and amortization accounts had balances as follows Plant Asset $ 182,000 Accumulated Depreciation and Amortization $ Category Land Land improvements Buildings Equipment Automobiles and trucks Leasehold improvements 1,850,000 1,475,000 179,000 230,000 335,900 324,500 107,325 115,000 Depreciation methods and useful lives: Buildings—150% declining balance; 25 years. Equipment Straight line; 10 years. Automobiles and trucks-200% declining balance; 5 years, all acquired after 2017. Leasehold improvements—Straight line. Land improvements—Straight line. Depreciation is computed to the nearest month and residual values are immaterial. Transactions during 2021 and other information:

Answer 1

Solution-

Cord Company
ANALYSIS OF CHANGES IN PLANT ASSETS
For the Year Ending December 31, 2021
	Balance			Balance
	12/31/20	Increase	Decrease	12/31/21
Land (Schedule -1)	$ 182,000.00	$576,000.00		$      758,000.00
Land improvements	$                   -	$234,000.00		$      234,000.00
Buildings (Schedule -1)	$ 1,850,000.00	$1,344,000.00		$   3,194,000.00
Equipment ((Schedule -2)	$ 1,475,000.00	$400,000.00	$ 20,500.00	$   1,854,500.00
Automobiles and trucks	$ 179,000.00	$ 13,200.00	$ 24,700.00	$      167,500.00
Leasehold improvements	$    230,000.00	$                     -	$              -	$      230,000.00
	$ 3,916,000.00	$    2,567,200.00	$ 45,200.00	$   6,438,000.00
Schedule 1
Computation of Fair Value of Plant Facility Acquired from King Company and Allocation to Land and Building
32,000shares of Webb common stock at $60 quoted market price on date of exchange (32,000X $60)	$1,920,000
Allocation to land and building accounts in proportion to appraised values at the exchange date:
	Market Value	Percentage of total
Land	$246,000.00	30.00%
Building	$574,000.00	70.00%
Total	$820,000.00	100.00%
Land = $1,920,000*30%	$576,000.00
Building = $1,920,000*70%	$1,344,000.00
Total	$1,920,000.00
Schedule 2
ANALYSIS OF MACHINERY AND EQUIPMENT ACCOUNT
Cost of new machinery and equipment
acquired
Invoice price	$332,000.00
Freight and unloading costs	$11,000.00
Installation costs	$57,000.00	$400,000.00
Requirement 2
Cord Company
DEPRECIATION AND AMORTIZATION EXPENSE
For the Year Ended December 31, 2021
Land Improvements	$        14,625.00
Buildings	$      171,486.00
Equipment	$      167,500.00
Automobiles and trucks	$      26,954.00
Leasehold improvements	$      23,000.00
Total depreciation and amortization	$ 403,565.00
Land Improvements
Cost	$    234,000.00
Straight-line rate (1/12 years)	0.083333333
	$      19,500.00
	x 3/4
Depreciation on land improvements for 2021: (3/25/21to12/31/21)	$        14,625.00
Buildings
Book value, 1/1/21 ($1,850,000-335,900)	$    1,514,100.00
Building acquired 1/6/21	$1,344,000.00
Total amount subject to depreciation	$ 2,858,100.00
150% declining balance rate: (1 / 25 years = 4% x 1.5)	6%
Depreciation Expense	$      171,486.00
Machinery and equipment:
Balance, 1/1/21	$    1,475,000.00
Straight-line rate (1 / 10 years)	0.1
		$         147,500.00
Purchased on 7/1/21	$400,000.00
Depreciation for one-half year	0.05	$ 20,000.00
Total		$         167,500.00
Automobiles and trucks
Book value, 1/1/21 ($179,000-107,325)	$71,675
Deduct 1/1/21 book value of truck sold on 9/30 ($12,200+2,340)	$14,540
Amount subject to depreciation	$57,135
200%declining balece rate: (1 / 5 years = 20% x 2.0)	40%
		$         22,854.00
Automobile purchased 8/30/21	$13,200
Depreciation for 2021 (40% x 4/12)	13.33%	$           1,760.00
Truck sold on 9/30/21 - depreciation (given)		$        2 340.00
Depreciation on automobiles and trucks		$         26,954.00
Leasehold improvements
Book value, 1/1/21 ($230,000-115,000)	115,000
Amortization period (1/1/17 to 12/31/236)	5
Amortization of leasehold improvements for 2021	23,000