Plant Assets - Acquisition, Disposal and Depreciation
Not what you're looking for?
Please see attached file.
At December 31, 2007 Ruiz Corporation reported the following plant assets
Land $ 3,000,000
Buildings $26,500,000
Less Accumulated Dep. Buildings $12,100,000 $ 14,400,000
Equipment $ 40,000,000
Less: Accumulated Dep. Equip. $ 5,000,000 $ 35,000,000
Total Plant Assets $ 52,400,000
During 2008, the following selected cash transactions occurred:
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 December 31, 1998. No salvage value was received.
A) Journalize the transactions, 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 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 2008
C) Prepare the plant assets section of Ruiz balance sheet at December 31, 2008
Purchase this Solution
Solution Summary
The solution explains the journal entries related to plant assets - acquisition, disposal and depreication. It also explains how to prepare the plant assets section of the balance sheet
Solution Preview
Please see the attached file.
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 ...
Purchase this Solution
Free BrainMass Quizzes
Accounting: Statement of Cash flows
This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.
Income Streams
In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.
Basic Social Media Concepts
The quiz will test your knowledge on basic social media concepts.
Marketing Research and Forecasting
The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.
Organizational Behavior (OB)
The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.