Zaz Ltd purchased three assets during the year ended December 31, 2023: Equipment was purchased on March 31 for $26, 500. In addition to the purchase price, Zaz paid $1,325 inGST and $1,590 in PST. Shipping was paid by Zaz at a cost of $600. A warehouse was constructed at a cost of $150,000. Legal fees were $1,250. Insurance of $12,000 wasprepaid on January 1 and construction finished on September 1. Machinery costing $ 40,000 was purchased on July 1. Installation and retrofitting costs were $4,000Required:1. Calculate the cost of each asset to be recorded on the Statement of Financial Position.2. Calculate and journalize depreciation at December 31, 2023 for each asset. Zaz prorates thefirst years depreciation for months in use and 10,000 units are produced.a. Equipment uses single declining balance (residual value of $3,000; useful life of 10 years). b. Warehouse uses straight line depreciation (residual value of $10,000; useful life of 25 years). c. Machinery uses the units of production method of depreciation (residual value of $2,500; useful life of 6 years and expected inventory production of 160,000 units).3. Show the expected Statement of Financial Position presentation of the three assets atDecember 31, 2024 (assuming to changes to asset cost i.e., no purchases or disposals ofassets) if Zaz produced 40,000 units in 2024.4. If Zaz sells the warehouse on March 31, 2025 for $ 125,000. Journalize depreciation for 2025and the sale of the warehouse.
Zaz Ltd purchased three assets during the year ended December 31, 2023: Equipment was purchased on March 31 for $26, 500. In addition to the purchase price, Zaz paid $1,325 inGST and $1,590 in PST. Shipping was paid by Zaz at a cost of $600. A warehouse was constructed at a cost of $150,000. Legal fees were $1,250. Insurance of $12,000 wasprepaid on January 1 and construction finished on September 1. Machinery costing $ 40,000 was purchased on July 1. Installation and retrofitting costs were $4,000Required:1. Calculate the cost of each asset to be recorded on the Statement of Financial Position.2. Calculate and journalize depreciation at December 31, 2023 for each asset. Zaz prorates thefirst years depreciation for months in use and 10,000 units are produced.a. Equipment uses single declining balance (residual value of $3,000; useful life of 10 years). b. Warehouse uses straight line depreciation (residual value of $10,000; useful life of 25 years). c. Machinery uses the units of production method of depreciation (residual value of $2,500; useful life of 6 years and expected inventory production of 160,000 units).3. Show the expected Statement of Financial Position presentation of the three assets atDecember 31, 2024 (assuming to changes to asset cost i.e., no purchases or disposals ofassets) if Zaz produced 40,000 units in 2024.4. If Zaz sells the warehouse on March 31, 2025 for $ 125,000. Journalize depreciation for 2025and the sale of the warehouse.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 7E: Loban Company purchased four cars for 9,000 each and expects that they will be sold in 3 years for...
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Transcribed Image Text:Zaz Ltd purchased three assets during the year ended December 31, 2023: Equipment was
purchased on March 31 for $26, 500. In addition to the purchase price, Zaz paid $1,325
inGST and $1,590 in PST. Shipping was paid by Zaz at a cost of $600. A warehouse was
constructed at a cost of $150,000. Legal fees were $1,250. Insurance of $12,000
wasprepaid on January 1 and construction finished on September 1. Machinery costing $
40,000 was purchased on July 1. Installation and retrofitting costs were $4,000Required:1.
Calculate the cost of each asset to be recorded on the Statement of Financial Position.2.
Calculate and journalize depreciation at December 31, 2023 for each asset. Zaz prorates
thefirst years depreciation for months in use and 10,000 units are produced.a. Equipment
uses single declining balance (residual value of $3,000; useful life of 10 years). b.
Warehouse uses straight line depreciation (residual value of $10,000; useful life of 25 years).
c. Machinery uses the units of production method of depreciation (residual value of $2,500;
useful life of 6 years and expected inventory production of 160,000 units).3. Show the
expected Statement of Financial Position presentation of the three assets atDecember
31, 2024 (assuming to changes to asset cost i.e., no purchases or disposals ofassets) if Zaz
produced 40,000 units in 2024.4. If Zaz sells the warehouse on March 31, 2025 for $
125,000. Journalize depreciation for 2025and the sale of the warehouse.
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