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Robertson Inc: Property Plant & Equipment loss on disposal

1. The property, plant, and equipment accounts of Robertson Inc. had the following balances at December 31,2014.
Account Name Amount
Land $300,000
Land improvements 140,000
Buildings 1,100,000
Equipment 960,000
Transactions that occurred during 201 include the following:
i. A tract of land was acquired for$150,000 as a potential building site.`
ii. A plant facility consisting of land and building was acquired from Pellium Company in exchange for 20,000 shares of Robertson's commons stick. On the acquisition date, Robertson's stock had a closing market price of $37 per share on a national stock exchange. The plant facility was carried on Pellium's books at $110,000 for land and $320,000 for the building at the exchange date. Current appraised value for the land is $230,000 and building is $690,000.
iii. Expenditures totaling $95,000 were made for the new parking lots, streets, and sidewalks at the corporation's various plant locations. These expenditures had an estimated useful life of 15 years.
iv. Items of machinery and equipment were purchased at a total cost of $400,000. Additional costs were incurred as follows.
Freight and unloading $13,000
Sales taxes 20,000
Installation 26,000
v. A machine costing $80,000 on January 1, 2007, was scrapped on June 30, 2015. Double-declining-balance depreciation has been recorded on the basis of a 10 year life.
vi. A machine was sold for $20,000 on July 1, 2015. Original cost o the machine was $44,000 on January 1, 2012, and it was depreciated on the straight-line basis over an estimated useful life of 7 years and a salvage value of $2,000.
1. Prepare a schedule analyzing the changes in each of the property, plant, and equipment accounts for 2014.
2. Prepare a schedule showing the gain or loss from each property, plant,and equipment's disposal that would be recognized in the company's income statement for the year ended December 31,2014.

Solution Summary

Your tutorial shows how to establish cost with a lump sum or basket purchase, what costs belong with the asset, how to figure the gain or loss on disposal, computations for DDB and SL methods. Click in cells to see computations.