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    Accounting for Plant Assets

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    Please see attachment.
    3 part problem
    Answer in excel format please.

    At Decemeber 31, 2007, Ruiz Corporation reported the following plant assets.

    Land $3,000,000
    Buildings $26,500,000
    Less: Accumulated depreciation- buildings 12,100,000 14,400,000
    Equipment 40 ,000,000
    Less: Accumulated depreciation-equipment 5,000,000 35,000,000
    Total plant assets $52,400,000

    During 2008, the following selected cash transactions occured
    Apr. 1 Purchased land for $2,200,000
    May.1 Sold equipment that cost $660,000 when purchased on January 1, 2001.
    The equipment was sold for $200,000.
    June.1 Sold land for $1,800,000. The land cost $700,000
    July. 1 Purchased equipment for $1,300,000
    Dec. 31 Retired equipment that cost $500,000 when purchased on Decemeber 31, 1998.
    No salvage value was recieved.

    a) Journalize the transactions above. Ruiz uses straight-line depreciation for buildings and equipment. The buildings are estimated to have a 40-year useful life and no salvage value; the equipment is estimated to have a 10-year useful life and no salvage value. Update depreciation on assets disposed of at the time of sale or retirement.
    b) Record adjusting entries for depreciation for 2008.
    c) Prepare the plant assets section of Ruiz's balancve sheet at Decemeber 31, 2008.

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    Solution Preview

    a. Journal Entries
    April 1 Land 2,200,000 Land is purchased for cash
    Cash 2,200,000

    May 1 Depreciation Expense 22,000 The equipment is sold, we adjust the depreciation
    Accumulated Depreciation- account for 4 months till May 1, given that the
    Equipment 22,000 life of equipment is 10 years
    ($660,000 X 1/10 X 4/12)

    1 Cash 200,000
    Accumulated Depreciation-
    Equipment 484,000
    Equipment 660,000
    Gain on Disposal 24,000

    Cost $660,000 The calculation of gain
    Accum. depr.-Equipment 484,000 The accumulated depreciation is for 7 years + 4 months
    [($660,000 X 1/10) X 7 + $22,000)]
    Book value 176,000
    Cash proceeds 200,000
    Gain on disposal $24,000 ...

    Solution Summary

    The solution explains how to record various transactions relating to plant assets and to prepare the plant assets section of the balance sheet