Problem 10-3 (Algo) Acquisition costs [LO10-1, 10-4, 10-6]
The plant asset and accumulated depreciation accounts of Pell
Corporation had the following balances at December 31,
2020:
|
Plant Asset |
Accumulated
Depreciation |
Land |
$ |
550,000 |
|
$ |
— |
|
Land improvements |
|
280,000 |
|
|
65,000 |
|
Building |
|
2,500,000 |
|
|
370,000 |
|
Equipment |
|
1,198,000 |
|
|
425,000 |
|
Automobiles |
|
250,000 |
|
|
132,000 |
|
|
Transactions during 2021 were as follows:
- On January 2, 2021, equipment were purchased at a total invoice
cost of $360,000, which included a $7,500 charge for freight.
Installation costs of $47,000 were incurred.
- On March 31, 2021, a small storage building was donated to the
company. The person donating the building originally purchased it
three years ago for $39,000. The fair value of the building on the
day of the donation was $24,500.
- On May 1, 2021, expenditures of $70,000 were made to repave
parking lots at Pell’s plant location. The work was necessitated by
damage caused by severe winter weather. The repair doesn’t provide
future benefits beyond those originally anticipated.
- On November 1, 2021, Pell acquired a tract of land with an
existing building in exchange for 10,000 shares of Pell's common
stock that had a market price of $37 per share. Pell paid legal
fees and title insurance totaling $43,000. Shortly after
acquisition, the building was razed at a cost of $55,000 in
anticipation of new building construction in 2022.
- On December 31, 2021, Pell purchased a small storage building
by giving $17,250 cash and an old automobile purchased for $28,000
in 2014. Depreciation on the old automobile recorded through
December 31, 2021, totaled $15,500. The fair value of the old
automobile was $5,750.
Required:
Prepare a schedule analyzing the changes in each of the plant
assets during 2021.