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    Plant assets and depreciation

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    At December 31, 2017, XYZ Corporation reported the following plant assets.

    Land $ 3,000,000
    Buildings $26,500,000
    Less: Accumulated depreciation—buildings 11,925,000 14,575,000
    Equipment 40,000,000
    Less: Accumulated depreciation—equipment 5,000,000 35,000,000
    Total plant assets $52,575,000

    During 2018, the following selected cash transactions occurred.

    Apr. 1 Purchased land for $2,200,000.
    May 1 Sold equipment that cost $600,000 when purchased on January 1, 2011. The equipment was sold for $170,000.
    June 1 Sold land for $1,600,000. The land cost $1,000,000.
    July 1 Purchased equipment for $1,100,000.
    Dec. 31 Retired equipment that cost $700,000 when purchased on December 31, 2008. No salvage value was received.

    Prepare the necessary journal entries.

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    https://brainmass.com/business/journal-entries/plant-assets-and-depreciation-651271

    Solution Preview

    Journal entries:
    Apr.1 Land [Debit] $2,200,000
    . . . Cash [Credit] $2,200,000
    May.1 Depreciation expense [Debit] $20,000
    . . . Accumulated depreciation [Credit] $20,000
    May.1 Cash [Debit] $170,000
    . Accumulated depreciation [Debit] $440,000
    . . . Equipment [Credit] . $600,000
    . . . Gain on disposal of plant assets ...

    Solution Summary

    The solution shows the computation of depreciation first and then the required journal entries.

    $2.49

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