Question

Problem 11-5 (Static) Property, plant, and equipment and intangible assets; comprehensive [LO11-2] 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 $812,500 for the land and building together. At the time of acquisition, the land had a fair value of $72,000 and the building had a fair value of $828,000. c. Land B was acquired on October 2, 2019, in exchange for 3,000 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 $25 per share. During October 2019, Thompson paid $10,400 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 $210,000 of the estimated total construction costs of $300,000. 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 $16,000 and the residual value at $2,000. f. Equipment A's total cost of $110,000 includes installation charges of $550 and normal repairs and maintenance of $11,000. Residual value is estimated at $5,500. Equipment A was sold on February 1, 2021. g. On October 1, 2020, Equipment B was acquired with a down payment of $4,000 and the remaining payments to be made in 10 annual installments of $4,000 each beginning October 1, 2021. The prevailing interest rate was 8%.

Answer 1

Answer is attached below. Please refer.

Thompson Cospoaahon Fixed fAssel & Dep9aualo Schodul Fos fiscal Year end 30O-Sep -a020 to 30 p Assel Auhn Cost dol Roidual Depaaation Estimat Depfor /r0 fe Qoo 02 atfad Land A 0 6sooD Not Appe / NA 14000 14000 9-750D Straight-live Note Ao Note 'Land B 02/13 9540D NA rvot apPplicab N/A Corunon 1ooco N/A Staaight l 30 Note 2007 derne jo balanu NoteD Equpmart 2/19 14000 Doratd) 2ooo Ss00 Surm years digy RaNete Equipmenl_10/J1s 93000 'A' 1F000 637S Staat Paf pete Euipment 1h/20 30840

Calculation land A ofdupaeciation foa Cuilding A Cost paid (Tolai)-$12500 Fais value ef ËLdm 82 8000 Add Fai Ualue A°$79000 otal Far value - $300000 fpportionnust bu Buildirg A Ca৪০০০ F49500 goooo0 -65000 ంలం X go0000 81asoo Depriciation of Beildng Value of bulding 747500 435000 20O000 Ce Rosidual Value 7etal 1900 00 Depsaui abon

ond Vote B Gost faid io shares ($asx3000) Aldl Demolition ihanges $75000 16400 25950 The cest af clamo litiors ef old building shall be fouluded 8 Cost of and as the expenses incuad to bring E asef into existane Note c Corstauction f Buildry The assal i carged tor clapoariation cahen th tixed asset i Froady töa usa bay the corporation The cosf foowreed while the css0 i stll undrpsoess" shall not be considurod for dlapsaiation unlse asset ug adly o Thus the Bauiding B' stars dipsoceabioo ouom July 8 eomplutad So no dapsouation ctargad when asset constaudion s fayment of 310000 till 30jos/aoa).

Note D Depaauahon e Equipment Cost of assSet16000 aght lina dapseuation sat O Rordual valte Pccelarabd Rat 60% 0sa ear Depaauiation Accelsad x Cost- Depreation Residhal Ralt Rat X 10 X (l6000 -a000) axio x 1400o) 0.2 X1900D Yeas 2 Depaauation AXDep Rat x(CostRasclual EYecer dap 8290

Deprcuatiooe EçLupmnt A Note E Total lost Ciny fostallahon & aapais& maint) 16600 Less Cost e sr0pais 600 99000 Det cos a 10Years Life Rasiclual value = 5500 month) Dep Bay Remaining kide Dep fautan Use 93500 Year exp L 93500 Dep Base Cost : 99000 - Residual value SSO0 -93500 Surm yeara ckge t I2f3+9+St6+71849t/o - SS Dep Base x Deparation fxaution Foamula 93500 X10 Year- Yeas a

Note F Rfe Eupment B 9000 Cost Cpayment) Add: Prosent value fostallmant $4000 X $26890 $4600 x 6.71D0 $30890 Depaeuraton ఇంకర Year (B0s/2D21). 308 90 AS years