MODUL 3 PROPERTY, PLANT, AND EQUIPMENT

SOAL 1 Park and Fly Company, incurred the following costs to acquire land, make land improvements, and construct and furnish a small building. Debits 1. Accrued real estate taxes paid at time of purchase of real estate $ 9,000 2. Real estate taxes on land paid for the current year 7,500 3. Full payment to building contractor 500,000 4. Excavation costs for new building 20,000 5. Cost of real estate purchased as a plant site (land $75,000 and building $25,000) 100,000 6. Cost of parking lots and driveways 18,000 7. Architects fees on building plans 9,000 8. Installation cost of fences around property 6,000 9. Cost of demolishing building to make land suitable for construction of new building 17,000 10. Cost of filling and grading the land 4.000 11. Material used to construct new building 55.000 12. Light for parking lot 9.000 13. Furniture 8.000 14. Transportation of furniture from seller to the building 400 15. Landscaping 12.000

Credit 16. Proceeds from salvage of demolished building

$ 3,500

Park and Fly depreciates land improvement over 10 years, building over 20 years, and furniture/equipment over 8 years, all on a straight line basis with zero residual value. Requirement : 1. Analyze the foregoing tranactions using the following column headings. Insert the number of each transaction in the Item space, and insert the amounts in the appropriate columns. For amounts entered in the Other Accounts column, also indicate the account title. Item Land Building Land Improvement Other Accounts 2. All construction was complete and the assets were placed in service on March 31, record partial-year depreciation for year ended December 31.

SOAL 2 On January 1, 20X1, The Sweet Bakery purchased a new mass production oven. The oven has expected life of 5 years. The system cost $ 230,000. Shipping, installation, and set up was an additional $ 40,000. At the end the useful life, Alex Dough, chief accountant for Sweet, expects to dispose of the oven for $ 50,000. He further anticipates total outputs of $ 2,400,000 loaves of bread over the useful life. a. Assuming use of the straight-line depreciation method, prepare a schedule showing annual depreciation expense, accumulated depreciation, and related calculations for each year b. Assuming use of the units-of outputs depreciation method, prepare a schedule showing annual depreciation, and related calculation for each year. Actual output, in bottles, was 400,000 (20X1) 450,000 (20X2) 480,000 (20X3) 500,000 (20X4) 570,000 (20X5) c. Assuming use of the double-declining balance depreciation method, prepare a schedule showing annual depreciation expense, accumulated depreciation, and related calculations for each year d. Assuming use of the straight-line method, prepare revised depreciation calculations if the useful life estimates was revised at the beginning of 20X4, to anticipate a remaining useful life 3 additional years (in other words, a total life 6 years). The revised useful life was accompanied by a change in estimated salvage value to $ 18,000. Instruction : Compute the amount of accumulated depreciation from 20X1-20X5, except for point (d) until 20X6 SOAL 3 On July 1, 2008, Herzog Inc. invested $900,000 in a mine estimated to have 1,200,000 tons of ore of uniform grade. The company paid $55,000 to remove unwanted buildings and $45,000 to prepare surface mining. During the last 6 months of 2008, 100,000 tons of ore were mined and sold. Instructions (a) Prepare the journal entry to record depletion expense. (b) Assume that the 100,000 tons of ore were mined, but only 80,000 units were sold. How are thecosts applicable to the 20,000 unsold units reported?