December 31, 2020, Grand Company reported the following as plant assets. Land $ 4,000,000 Buildings $28,500,000 Less: Accumulated depreciation—buildings 12,100,000 16,400,000 Equipment 48,000,000 Less: Accumulated depreciation—equipment 5,000,000 43,000,000 Total plant assets $63,400,000 During 2021, the following selected cash transactions occurred. April 1 Purchased land for $2,130,000. May 1 Sold equipment that cost $750,000 when purchased on January 1, 2017. The equipment was sold for $450,000. June 1 Sold land purchased on June 1, 2011 for $1,500,000. The land cost $400,000. July 1 Purchased equipment for $2,500,000. Dec. 31 Retired equipment that cost $500,000 when purchased on December 31, 2011. The company received no proceeds related to salvage. Instructions c. Prepare the plant assets section of Grand’s balance sheet at December 31, 2021.
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
t December 31, 2020, Grand Company reported the following as plant assets.
Land $ 4,000,000
Buildings $28,500,000
Less:
Equipment 48,000,000
Less: Accumulated depreciation—equipment 5,000,000 43,000,000
Total plant assets $63,400,000
During 2021, the following selected cash transactions occurred.
April 1 Purchased land for $2,130,000.
May 1 Sold equipment that cost $750,000 when purchased on January 1, 2017. The equipment
was sold for $450,000.
June 1 Sold land purchased on June 1, 2011 for $1,500,000. The land cost $400,000.
July 1 Purchased equipment for $2,500,000.
Dec. 31 Retired equipment that cost $500,000 when purchased on December 31, 2011. The
company received no proceeds related to salvage.
Instructions
c. Prepare the plant assets section of Grand’s
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