Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Chapter 11, Problem 11.6P
Disposals of Long-Term Operating Assets—Analysis,
| Balance Sheet Category | Cost | Accumulated Depreciation Through 12/31/2018 |
Estimated Useful Life (Years) |
Estimated Residual Value |
Depreciation Method |
| Equipment | $ 500,000 | $ 180,000 | 10 | $ 50,000 | Double-declining balance |
| Machinery | 345,500 | 170,000 | 8 | 5,500 | Straight line |
| Vehicles | 127,900 | 75,000 | 5 | 2,900 | Straight line |
| Leasehold Improvements |
65,400 | 21,800 | 3 | 0 | Straight line |
| Building | 12,000,000 | 3,252,000 | 20 | 1,500,000 | Straight line |
| Land | 4,560,000 | N/A | N/A | N/A | N/A |
The fiscal year-end of the company is December 31. The following events occurred during 2019:
- 1. On February 1, Rivera sold the vehicles to Wholesale Produce, Inc. for $15,000
- 2. On March 31, all of Rivera’s equipment and machinery was destroyed by a fire in one of its facilities.
- 3. On May 1, the equipment was replaced at a cost of $625,000, and the machinery cost the company $420,000 to replace. The estimated useful lives and residual values remained the same as specified for the original machinery and equipment. The company paid cash
Required
- a. Prepare the
journal entries required to record each of those events and to record depreciation expense at the end of the year. - b. Determine the ending net book value of Rivera’s long-term operating assets on its December 31, 2019, balance sheet. Show the balance for each asset individually and in total.
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Chapter 11 Solutions
Intermediate Accounting (2nd Edition)
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