The Fells Point Company's plant asset and accumulated depreciation accounts had the following balances on December 31, 2008:
|
Category
|
Plant Asset Account
|
Accumulated Depreciation
|
|
Land
|
$175,000
|
$0
|
|
Building
|
1,500,000
|
328,900
|
|
Machinery & Equipment
|
1.125,000
|
317,500
|
|
Automobiles & Trucks
|
172,000
|
100,325
|
|
Leasehold improvements
|
216,000
|
108,000
|
|
Land improvements
|
0
|
0
|
Depreciation methods and estimated useful lives:
Buildings: 150% declining balance, 25 years
Machinery & Equipment: Straight-line, 10 years
Automobiles & trucks: 150% declining balance, 5 years, all acquired after 2005
Leasehold improvements: Straight-line
Land improvements: Straight-line
Depreciation is computed to the nearest month and residual values are immaterial.
The following transactions occurred during 2009 and other information:
a. On January 6, a plant facility consisting of land and building were acquired from Keller Corporation in exchange for 25,000 shares of Fells Point common stock. On this date, Fells Point's actively traded stock had a market price of $50 per share. Current assessed values of land and building are $187,500 and $562,500, respectively.
b. On March 25, parking lots, streets and sidewalks at the new plant were completed at a total cost of $192,000. These expenditures had an estimated useful life of 12 years.
c. The leasehold improvements were completed at December 31, 2005, and had an estimated useful life of 8 years. The lease has been renewed to December 31, 2013.
d. On July 1, machinery and equipment was purchased for a total invoice price of $325,000. Additional costs of $10,000 for delivery and $50,000 for installation were incurred.
e. On August 30, Fells Point purchased a new automobile for $12,500.
f. On September 30, a truck with a cost of $24,000 and a carrying amount of $9,100 on the date of sale was sold for $11,500. Depreciation Expense of $2,650 for the 9 months of 2007 had not yet been recorded.
g. On December 20, a machine with a cost of $17,000 and a carrying amount of $2,975 at the date of disposal was scrapped with cash recovery.
Required: Show all your work. Round all calculations to the nearest dollar.
a. Prepare journal entries to record each of the transactions above.
b. What is the carrying amount of each asset category at the end of 2009?