Horngren's Accounting (12th Edition)
12th Edition
ISBN: 9780134486444
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Textbook Question
Chapter 10, Problem P10.30APGA
Determining asset cost and recoding partial-year
Learning Objectives 1, 2
1. Bldg. $$461,100
Discount Parking, near an airport, incurred the following costs to acquire land, make land improvements, and construct and furnish a small building:
| Purchase price of three acres of land | $ 80,000 |
| Delinquent real estate taxes on the land to be paid by Discount Parking | 6,300 |
| Additional dirt and earthmoving | 9,000 |
| Title insurance of the land acquisition | 3,200 |
| Fence around the boundary of the property | 9,600 |
| Building permit for the building | 1,000 |
| Architect’s fee for the design of the building | 20,700 |
| Signs near the front of the property | 9,300 |
| Materials used to construct the property | 215,000 |
| Labor to construct the property | 175,000 |
| Interest cost on construction loan for the building | 9,400 |
| Parking lots on the property | 28,500 |
| Lights for the parking lots | 11,200 |
| Salary of construction supervisor (80% to building; 20% to parking lot and concrete walls) | 50,000 |
| Furniture | 11,200 |
| Transportation of furniture from seller to the building | 2,200 |
| Additional fencing | 6,600 |
Discount Parking depreciates land improvements over 15 years, buildings over 40 years, all on a straight-line basis with zero residual value.
Requirements
- Set up columns for Land, Land Improvements, Building, and Furniture. Show how to account for each cost by listing the cost under the correct account. Determine the total cost of each asset.
- All construction was complete and assets were placed on October 1. Record partial-year depreciation expense for the year ended December 31.Round to the nearest dollar.
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Sale of Equipment
Equipment was acquired at the beginning of the year at a cost of $612,500. The equipment was depreciated using the straight-line method based on an estimated useful life of 9 years and an estimated residual value of $44,360.
a. What was the depreciation for the first year? Round your answer to the nearest cent.
b. Using the rounded amount from Part a in your computation, determine the gain(loss) on the sale of the equipment, assuming it was sold at the end of year eight for $102,987.
Round your answer to the nearest cent and enter as a positive amount.
c. Journalize the entry to record the sale. If an amount box does not require an entry, leave it blank. Round your answers to the nearest cent.
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Chapter 10 Solutions
Horngren's Accounting (12th Edition)
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