ith of acquisition a. Depreciation is computed from tne b. Land A and Building A were acquired from a predecessor corporation. At the time of acquisition, the land had a fair value of $72,000 and the b c. Land B was acquired on October 2, 2019, in exchange for 3,000 newly acquisition, the stock had a par value of $5 per share and a fair value o $10,400 to demolish an existing building on this land so it could constru d. Construction of Building B on the newly acquired land began on Octobe $210,000 of the estimated total construction costs of $300,000. Estima e. Certain equipment was donated to the corporation by the city. An indep the fair value at $16,000 and the residual value at $2,000. f. Equipment A's total cost of $110,000 includes installation charges of $5! value is estimated at $5,500. Equipment A was sold on February 1, 202 g. On October 1, 2020, Equipment B was acquired with a down payment
ith of acquisition a. Depreciation is computed from tne b. Land A and Building A were acquired from a predecessor corporation. At the time of acquisition, the land had a fair value of $72,000 and the b c. Land B was acquired on October 2, 2019, in exchange for 3,000 newly acquisition, the stock had a par value of $5 per share and a fair value o $10,400 to demolish an existing building on this land so it could constru d. Construction of Building B on the newly acquired land began on Octobe $210,000 of the estimated total construction costs of $300,000. Estima e. Certain equipment was donated to the corporation by the city. An indep the fair value at $16,000 and the residual value at $2,000. f. Equipment A's total cost of $110,000 includes installation charges of $5! value is estimated at $5,500. Equipment A was sold on February 1, 202 g. On October 1, 2020, Equipment B was acquired with a down payment
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:a. Depreciation is computed from the first of the month of acquisition to the first of the month of disposition.
b. Land A and Building A were acquired from a predecessor corporation. Thompson paid $812,500 for the land and building together.
At the time of acquisition, the land had a fair value of $72,000 and the building had a fair value of $828,000.
c. Land B was acquired on October 2, 2019, in exchange for 3,000 newly issued shares of Thompson's common stock. At the date of
acquisition, the stock had a par value of $5 per share and a fair value of $25 per share. During October 2019, Thompson paid
$10,400 to demolish an existing building on this land so it could construct a new building.
d. Construction of Building B on the newly acquired land began on October 1, 2020. By September 30, 2021, Thompson had paid
$210,000 of the estimated total construction costs of $300,000. Estimated completion and occupancy are July 2022.
e. Certain equipment was donated to the corporation by the city. An independent appraisal of the equipment when donated placed
the fair value at $16,000 and the residual value at $2,000.
f. Equipment A's total cost of $110,000 includes installation charges of $550 and normal repairs and maintenance of $11,000. Residual
value is estimated at $5,500. Equipment A was sold on February 1, 2021.
g. On October 1, 2020, Equipment B was acquired with a down payment of $4,000 and the remaining payments to be made in 10
annual installments of $4,000 each beginning October 1, 2021. The prevailing interest rate was 8%.
Required:
Supply the correct amount for each answer box on the schedule. (Round your intermediate calculations and final answers to the
nearest whole dollar.)
THOMPSON CORPORATION
Fixed Asset and Depreciation Schedule
For Fiscal Years Ended September 30, 2020, and September 30, 2021
Acquisition
Date
Depreciation
Method
Estimated
Life in Years
Depreciation for Year
Ended 9/30
Assets
Cost
Residual
2020
2021
Land A
10/1/2019
$
65,000
N/A
not applicable
N/A
N/A
N/A
Building A
10/1/2019
747,500 $47,500
Straight-line
50
$
14,000
Land B
10/2/2019
85,400
N/A
not applicable
N/A
N/A
N/A
Building B
Donated Equipment
Under construction
210,000 to date
Straight-line
30
10/2/2019
16,000
2,000
200% Declining balance
10
Equipment A
10/2/2019
99,000
5,500
Sum-of-the years'-digits
10
17,000
Equipment B
10/1/2020
30,840
Straight-line
15
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