The following data relate to the Plant Asset account of Planter Co., at December 31, 1999.
Plant Asset
A B C D
Original cost ? $240,000 $25,000,000 $60,000
Year purchased Jan 1, 1992 Jan 1. 1998 ? Jan 1, 1994
Useful life 20 years ? 30 years 10 years
Salvage Value $10,000 $30,000 $2,000,000 $4,000
Depreciation Method Straight Line Sum-of-Years Straight line 150% declining balance
Accumulated Depr ? $126,000* ? ?
Book value $196,000 ? $20,783,333 ?
For Asset B the depreciation was $70,000 in 1998 and $56,000 in 1999.
a) On December 31, 1999, after all adjusting journal entries are complete, Asset A has a book value of $196,000 as given above. Determine the cost of the machine.
b) Determine the useful life of Asset B (or how long Planter expects Asset B to be used) and provide the appropriate depreciation journal entry for fiscal year 2000?
c) On the firm's December 31, 1999 financial statements, the book value of Asset C is $20,783,333 million as given above. Determine the year (Jan 1, 19xx) in which Asset C was purchased?
d) For 1999, Planter decides to change the depreciation method of Asset D to the straight line method (note that the FASB does not consider a change in depreciation method to be a change in Accounting Principle).
(i) Prepare the appropriate journal entry to account for this change in accounting method.
(ii) In addition to the change to the straight line method now assume that Planter determines that the estimated life has been extended to 8 years (from the beginning of the current year) with a salvage of $5,000 at the end of that time. Prepare the appropriate journal entry to account for this change in estimate.
e) Complete the missing information in the chart for the Assets A through D.