Vous êtes sur la page 1sur 2

9TH MEETING OF INTRODUCTORY ACCOUNTING TUTORIAL

PLANT ASSETS, NATURAL RESOURCES AND INTANGIBLE ASSETS


TEACHING ASSISTANT TEAM

Problem 1 – Various Depreciation Methods


In recent years, Metromaxi Transportation purchased three used buses. Matromaxi also has
purchased a patent that has validity period of 20 years. Because of frequent turnover in the
accounting department, a different accountant selected the depreciation method for each
bus, and various methods were selected. Information concerning the buses and patent is
summarized as follows.
Useful Depreciation/
Acquired Salvage life in Amortization
Assets (m/d/YYYY) Cost Value years method
Bus Tayo 7/1/2016 $ 96,000 $ 6,000 5 Straight-line
Bus Rogi 1/1/2016 $ 110,000 $ 10,000 4 Double declining-
balance
Bus Bongbong 1/1/2017 $ 92,000 $ 8,000 5 Units-of-activity
Patent 1/1/2017 $ 80,000 $ - 20 Straight-line

For the declining-balance method, the company uses the double-declining rate. For the units-
of-activity method, total miles are expected to be 120,000. Actual miles of used for Bus
Bongbong were 2017, 24,000 and 2018, 34,000.

Instructions
a) Prepare adjusting entries for depreciation expense of each bus and amortization
expense of patent at the end of the year 2016, 2017, and 2018
b) Compute the amount of accumulated depreciation and book value on each bus and
patent at December 31, 2018.
c) If Bus Rogi was purchased on April 1 instead of January 1, what is the depreciation
expense for Bus Rogi in 2016 and 2017?

Problem 2 – Plant Assets Transactions


At December 31, 2017, Aladdin Co reported the following as plant assets.
Land $ 5,000,000
Building $ 29,500,000
Accum. Depreciation-building (11,100,000) …………………
Equipment 49,000,000
Accum. Depreciation-Equipment (6,000,000) …………………
Total plant assets …………………

During 2018, the following plant assets transactions occurred.


April 1 Purchased land for $1,100,000
May 1 Sold building that was cost $4,800,000 when purchased on January 1, 2014. The
building was sold for $4,500,000
June 1 Sold land purchased on June 1, 2008 for $1,000,000. The land cost $300,000
July 1 Purchased equipment for $3,000,000
Dec 31 Exchanged an old equipment with a new one. Also paid additional $150,000 for
the exchange. The old equipment has a cost of $500,000 when purchased on
January 1, 2011. The new equipment has a fair value of $180,000.
Dec 31 Retired equipment that cost $750,000 when purchased on December 31, 2008.

Instructions
a) Journalize the above transactions. The company uses straight-line depreciation for
buildings and equipment. The buildings are estimated to have a 25-year useful life and
no salvage value. The equipment is estimated to have a 10-year useful life and no
salvage value. Update the depreciation on assets disposed of at the time of sale or
retirement.
b) Record adjusting entries for depreciation for 2018.
c) Prepare the plant assets section of Aladdin’s balance sheet at December 31, 2018.

Vous aimerez peut-être aussi