Question

Selected accounts included in the property, plant, and equipment section of Windsor Corporation’s balance sheet at December 31, 2016, had the following balances.

Land		$ 348,000
Land improvements		162,400
Buildings		1,276,000
Equipment		1,113,600

During 2017, the following transactions occurred.

1.		A tract of land was acquired for $ 174,000 as a potential future building site.
2.		A plant facility consisting of land and building was acquired from Mendota Company in exchange for  23,200 shares of Windsor’s common stock. On the acquisition date, Windsor’s stock had a closing market price of $ 37 per share on a national stock exchange. The plant facility was carried on Mendota’s books at $ 127,600 for land and $ 371,200 for the building at the exchange date. Current appraised values for the land and building, respectively, are $ 266,800 and $ 800,400.
3.		Items of machinery and equipment were purchased at a total cost of $ 464,000. Additional costs were incurred as follows.

Freight and unloading		$ 15,080
Sales taxes		23,200
Installation		30,160

4.		Expenditures totaling $ 110,200 were made for new parking lots, streets, and sidewalks at the corporation’s various plant locations. These expenditures had an estimated useful life of  15 years.
5.		A machine costing $ 92,800 on January 1, 2009, was scrapped on June 30, 2017. Double-declining-balance depreciation has been recorded on the basis of a  10-year life.
6.		A machine was sold for $ 23,200 on July 1, 2017. Original cost of the machine was $ 51,040 on January 1, 2014, and it was depreciated on the straight-line basis over an estimated useful life of  7 years and a salvage value of $ 2,320.

(a) Calculate the balance at December 31, 2017 in each of the following balance sheet accounts. (Hint: Disregard the related accumulated depreciation accounts.)

		Balance at December 31, 2017
Land		$
Land Improvements		$
Buildings		$
Equipment		$

Answer 1

(a) Calculate the balance at December 31, 2017 in each of the following balance sheet accounts. (Hint: Disregard the related accumulated depreciation accounts.)
	Balance at December 31, 2017
Land	$562,600.00
Land Improvements	$272,600.00
Buildings	$1,919,800.00
Equipment	$1,502,200.00
a)
WINDSOR COMPANY
ANALYSIS OF LAND ACCOUNT
Balance at January 1, 2017	$348,000.00
Plant facility acquired from Mendota Company- portion of fair value allocated to land (Schedule 1)	$214,600.00
Balance at December 31, 2017	$562,600.00
Schedule 1
Computation of Fair Value of Plant Facility Acquired from Ken Mendota Company and Allocation to Land and Building
23,200 shares of Webb common stock at $37 quoted market price on date of exchange (23,200 X $37)	$858,400.00
Allocation to land and building accounts in proportion to appraised values at the exchange date:
	Market Value	Percentage of total
Land	$266,800.00	25.00%
Building	$800,400.00	75.00%
Total	$1,067,200.00	100.00%
Land = $858,400 x 25%	$214,600.00
Building = $858,400 x 75%	$643,800.00
Total	$858,400.00
b)
WINDSOR COMPANY
ANALYSIS OF LAND IMPROVEMENTS ACCOUNT
Balance at January 1, 2017	$162,400.00
Parking lots, streets, and sidewalks	$110,200.00
Balance at December 31, 2017	$272,600.00
c)
WINDSOR COMPANY
ANALYSIS OF BUILDINGS ACCOUNT
Balance at January 1, 2017	$1,276,000.00
Plant facility acquired from Mendota Company- portion of fair value allocated to Building (Schedule 1)	$643,800.00
Balance at December 31, 2017	$1,919,800.00
d)
WINDSOR COMPANY
ANALYSIS OF MACHINERY AND EQUIPMENT ACCOUNT
Balance at January 1, 2017		$1,113,600.00
Cost of new machinery and equipment acquired
Invoice price	$464,000.00
Freight and unloading costs	$15,080.00
Sales taxes	$23,200.00
Installation costs	$30,160.00	$532,440.00
		$1,646,040.00
Deduct cost of machines disposed of
Machine scrapped June 30, 2017	$92,800.00
Machine sold July 1, 2017	$51,040.00	-$143,840.00
Balance at December 31, 2017		$1,502,200.00
The tract of land, which was acquired for $174,000 as a potential future building site, should be included in Windsor’s balance sheet as an investment in land.