Property, Plant and Equipment
PPE-1) P & P Products is relocating their Human Resources department to an unused space that is closer to the main administration building. The 4,000 square foot space is empty and has not been used in several years. Jane, the VP of Personnel, is overseeing the conversion and relocation of the HR department. P & P Products maintenance department will perform the work. Jane has asked George, the maintenance foreman, to prepare a list of what needs to be completed in order to make the space ready for occupancy. George has provided the following list of tasks and their estimated costs. Assume that contractors will perform the construction and that the prices given include labor costs:
1. Painting (the current walls have paint peeling)-$15,000
2. Removal of old asbestos in the ceiling-$12,000
3. Replacing the wood floors with tile to increase the life of the space-$34,000
4. Installing wiring for computers-$18,000
5. Installing modular units for work space-$124,000
Required: Prepare any necessary entries for the items above.
PPE-2) In addition to the costs listed above, Jane asked the IT department to give her a price list for new computer equipment.
The following information was provided:
a. 14 new computers-$140,000. Additionally, P&P Products would have to pay $2,000 for freight and 6% tax on $140,000. The estimated useful life is 5 years, with a 5% salvage value. The computers are listed as a single unit for financial reporting purposes.
b. 10 existing computers, with a total trade-in value of $10,000 will be traded for the new computers. The computers are treated as a single unit for financial reporting purposes. These computers have an original cost of $80,000 and a book value of $8,000. The remainder of the purchase price of the new computers will be paid in cash.
c. Additional IT personnel to support the increased workload created by the HR department-$200,000 annually. This amount includes fringe benefits and taxes.
Required: Prepare the potential journal entries for the above items (a, b, c only) assuming that the exchange is considered to have commercial substance.
PPE-3) Refer to the information in problem PPE-2. Assume that the old computers cost $100,000 and had a book value of $18,000.
Required: Make the necessary journal entries.