Required: For each asset classification, prepare a schedule showing depreciation for the year ended December 31, 2024, using the following depreciation methods and useful lives:
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.
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![The plant asset and accumulated depreciation accounts of Pell Corporation had the following balances at December 31, 2023:
Plant Asset Accumulated Depreciation
$360,000
183,000
1,520,000
1,178,000
152,000
Land
Land improvements
Building
Equipment
Automobiles
$0
47,000
407, 217
415,000
113,000
Transactions during 2024 were as follows:
a. On January 2, 2024, equipment were purchased at a total invoice cost of $270,000, which included a $5,700 charge for freight.
Installation costs of $29,000 were incurred in addition to the invoice cost.
b. On March 31, 2024, a small storage building was donated to the company. The person donating the building originally purchased
it three years ago for $27,000. The fair value of the building on the day of the donation was $18,000.
c. On May 1, 2024, expenditures of $52,000 were made to repave parking lots at Pell's plant location. The work was necessitated
by damage caused by severe winter weather. The repair doesn't provide future benefits beyond those originally anticipated.
d. On November 1, 2024, Pell acquired a tract of land with an existing building in exchange for 10,000 shares of Pell's common
stock that had a market price of $40 per share. Pell paid legal fees and title insurance totaling $24,000. Shortly after acquisition,
the building was razed at a cost of $37,000 in anticipation of new building construction in 2025.
e. On December 31, 2024, Pell purchased a small storage building by giving $15,750 cash and an old automobile purchased for
$19,000 in 2017. Depreciation on the old automobile recorded through December 31, 2024, totaled $14,250. The fair value of the
old automobile was $3,850.
Required:
For each asset classification, prepare a schedule showing depreciation for the year ended December 31, 2024, using the following
depreciation methods and useful lives:](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbc49b70e-3bee-4d78-855e-9a8fe26fc256%2Fedb3befe-0cbe-480a-98d5-c1297ba3658d%2Fi7cc5r6_processed.png&w=3840&q=75)
![Land improvements-Straight line; 15 years.
Building-150% declining balance; 20 years.
Equipment Straight line; 10 years.
Automobiles-Units-of-production; $0.50 per mile
Depreciation is computed to the nearest month and no residual values are used. Automobiles were driven 39,000 miles in 2024.
Note: Do not round intermediate calculations and round your final answers to 2 decimal places.
PELL CORPORATION
Depreciation
For the Year Ended December 31, 2024
Land Improvements
Building
Equipment
Automobiles
Total depreciation for 2024
$
0.00](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbc49b70e-3bee-4d78-855e-9a8fe26fc256%2Fedb3befe-0cbe-480a-98d5-c1297ba3658d%2Flyyct2_processed.png&w=3840&q=75)
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