The property, plant, and equipment accounts for Bonita Company held the following opening balances on January 1, 2017 (the first day of Bonita's fiscal year): Land $502,000 786,000 Equipment Accumulated Depreciation-Equipment Machinery Accumulated Depreciation-Machinery b. C 142,000 The following transactions took place during 2017 (assume all transactions took place on January 1): a Bonita Company paid $19,200 related to the machinery and $7,700 related to the equipment for maintenance to keep the assets in normal working order. Equipment with an original cost of $39,800 and accumulated depreciation of $29,600 was traded in on some new equipment. The new equipment had a fair value of $52,000, and Bonita was given a trade in allowance of $4,400 for the old equipment. Bonita Company made an agreement with GRN Ltd. to exchange two similar plots of land. Bonita's land had an original cost of $502,000 and a fair value of 5722,000. GRN's land had an original cost of 5526,700 and a fair value of $760,600. Bonita also paid $38,600 in cash to GRN as part of the transaction. The exchange lacks commercial substance. Bonita paid $69,700 on a major upgrade to some of the equipment that significantly increased the economic life of the equipment. d. 456,000 167,000 Prepare the journal entries to record the above transactions on the books of Bonita Company.
The property, plant, and equipment accounts for Bonita Company held the following opening balances on January 1, 2017 (the first day of Bonita's fiscal year): Land $502,000 786,000 Equipment Accumulated Depreciation-Equipment Machinery Accumulated Depreciation-Machinery b. C 142,000 The following transactions took place during 2017 (assume all transactions took place on January 1): a Bonita Company paid $19,200 related to the machinery and $7,700 related to the equipment for maintenance to keep the assets in normal working order. Equipment with an original cost of $39,800 and accumulated depreciation of $29,600 was traded in on some new equipment. The new equipment had a fair value of $52,000, and Bonita was given a trade in allowance of $4,400 for the old equipment. Bonita Company made an agreement with GRN Ltd. to exchange two similar plots of land. Bonita's land had an original cost of $502,000 and a fair value of 5722,000. GRN's land had an original cost of 5526,700 and a fair value of $760,600. Bonita also paid $38,600 in cash to GRN as part of the transaction. The exchange lacks commercial substance. Bonita paid $69,700 on a major upgrade to some of the equipment that significantly increased the economic life of the equipment. d. 456,000 167,000 Prepare the journal entries to record the above transactions on the books of Bonita Company.
Chapter1: Financial Statements And Business Decisions
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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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Transcribed Image Text:The property, plant, and equipment accounts for Bonita Company held the following opening balances on January 1, 2017 (the first day of Bonita's fiscal year):
Land
$502,000
786,000
Equipment
Accumulated Depreciation-Equipment
Machinery
Accumulated Depreciation-Machinery
b.
142,000
The following transactions took place during 2017 (assume all transactions took place on January 1):
a. Bonita Company paid $19,200 related to the machinery and $7,700 related to the equipment for maintenance to keep the assets in normal working order.
Equipment with an original cost of $39,800 and accumulated depreciation of $29,600 was traded in on some new equipment. The new equipment had a fair value of $52,000, and Bonita was given a trade in allowance of $4,400 for the old equipment.
Bonita Company made an agreement with GRN Ltd. to exchange two similar plots of land. Bonita's land had an original cost of $502,000 and a fair value of $722,000. GRN's land had an original cost of $526,700 and a fair value of $760,600. Bonita also paid
$38,600 in cash to GRN as part of the transaction. The exchange lacks commercial substance.
Bonita paid $69,700 on a major upgrade to some of the equipment that significantly increased the economic life of the equipment.
d.
456,000
167,000
Prepare the journal entries to record the above transactions on the books of Bonita Company.
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