Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Question
Chapter 11, Problem 21P
To determine
Prepare necessary journal and
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Students have asked these similar questions
Vaughn Corporation owns machinery that cost $26,000 when purchased on July 1, 2021. Depreciation has been recorded at a rate of
$3,120 per year, resulting in a balance in accumulated depreciation of $10,920 at December 31, 2025. The machinery is sold on
September 1, 2026, for $6,760.
Prepare journal entries to (a) update depreciation for 2026 and (b) record the sale. (Credit account titles are automatically indented when
amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all
debit entries before credit entries.)
No. Account Titles and Explanation
(a)
(b)
Debit
Credit
Kingbird Assets Inc., a publicly listed company, has a building with an initial cost of $406,000. At December 31, 2020, the date of
revaluation, accumulated depreciation amounted to $99,000. The fair value of the building, by comparing it with transactions
involving similar assets, is assessed to be $337,700. On January 5, 2021, Kingbird sold the building for $332,700 cash.
Your answer is partially correct.
Prepare the journal entries to record the sale of the building after having used the cost model. (Credit account titles are
automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles
and enter O for the amounts.)
Date Account Titles and Explanation
Debit
Credit
Jan. 5
Accumulated Depreciation - Buildings
99000
Cash
332700
Gain on Disposal of Building
Buildings
Hawks Corporation’s Property, Plant and Equipment section of its statement of financial position as of December 31, 2019 included the following:
Land
P 400,000
Buildings
3,200,000
The following transactions occurred during 2020:
Land site number 102 was acquired for P4,000,000. Additionally, to acquire the land the entity paid a P240,000 commission to a real estate agent. Costs of P60,000 were incurred to clear the land. During the course of clearing the land, timber and gravel were recovered and sold for P20,000.
A second tract of land (site number 103) with a building was acquired for P1,200,000. Based on reliable information at the time of acquisition, fair value of land is P800,000 and the building P400,000. Shortly after acquisition, the building was demolished at a cost of P120,000. A new building was constructed for P1,600,000 plus the following costs:
Excavation fees
P 44,000
Architectural design fees
32,000
Building permit…
Chapter 11 Solutions
Intermediate Accounting: Reporting And Analysis
Ch. 11 - Briefly explain the meaning of the four factors...Ch. 11 - Prob. 2GICh. 11 - Would it be desirable to require all companies to...Ch. 11 - What is the depredation base?Ch. 11 - Prob. 5GICh. 11 - A company should use an accelerated depreciation...Ch. 11 - Prob. 7GICh. 11 - Prob. 8GICh. 11 - Prob. 9GICh. 11 - Prob. 10GI
Ch. 11 - Under U.S. GAAP, in a year in which the fair value...Ch. 11 - Prob. 12GICh. 11 - Prob. 13GICh. 11 - Compare the group and composite methods of...Ch. 11 - Prob. 15GICh. 11 - Describe the accounting for changes and...Ch. 11 - Prob. 17GICh. 11 - Prob. 18GICh. 11 - Explain the meaning of an impaired asset and...Ch. 11 - Prob. 20GICh. 11 - Prob. 21GICh. 11 - Prob. 22GICh. 11 - (Appendix 11.1) Why might depreciation on a...Ch. 11 - A method that excludes residual value from the...Ch. 11 - Vorst depreciates Asset A on the...Ch. 11 - Using the sum-of-the-years-digits method, how much...Ch. 11 - Vorst depreciates Asset C by the straight-line...Ch. 11 - A machine with a 4-year estimated useful life and...Ch. 11 - At the end of the expected useful life of a...Ch. 11 - The composite depreciation method: a. is applied...Ch. 11 - On July 1, 2018, Mundo Corporation purchased...Ch. 11 - A fixed asset with a 5-year estimated useful life...Ch. 11 - Crowder Company acquired a tract of land...Ch. 11 - Susquehanna Company purchased an asset at the...Ch. 11 - Akron Incorporated purchased an asset at the...Ch. 11 - Albany Corporation purchased equipment at the...Ch. 11 - Utica Machinery Company purchases an asset for...Ch. 11 - In Year 1, Utica Machinery Company uses the asset...Ch. 11 - At the beginning of Year 1, Herkimer Co....Ch. 11 - At the end of Year 1, Herkimer Co. sells two...Ch. 11 - Buffalo, Inc., uses composite depreciation for its...Ch. 11 - Prob. 9RECh. 11 - Assume the same information as in RE11-3, except...Ch. 11 - Oneonta Co. owns equipment with a cost of 300,000...Ch. 11 - At the beginning of the current year, Andy Company...Ch. 11 - Prob. 13RECh. 11 - (Appendix 11.1) Auburn Company purchased an asset...Ch. 11 - Depreciation Methods Gruman Company purchased a...Ch. 11 - Depreciation Methods Sorter Company purchased...Ch. 11 - Depreciation Methods Nickle Company purchased...Ch. 11 - Determination of Acquisition Cost On January 1,...Ch. 11 - Comprehensive: Acquisition, Subsequent...Ch. 11 - Prob. 6ECh. 11 - Loban Company purchased four cars for 9,000 each...Ch. 11 - Wilcox Company acquires four machines that have...Ch. 11 - Lightning Delivery Company purchased a new...Ch. 11 - Hathaway Company purchased a copying machine for...Ch. 11 - On May 10, 2019, Horan Company purchased equipment...Ch. 11 - Reveille, Inc., purchased Machine #204 on April 1,...Ch. 11 - Bailand Company purchased a building for 210,000...Ch. 11 - On January 1, 2019, Barbosa Company purchased a...Ch. 11 - On January 1, 2015, Vallahara Company purchased...Ch. 11 - Swann Company sold a delivery truck on April 1,...Ch. 11 - On July 1, 2019, Osceola Company retired a metal...Ch. 11 - Prob. 18ECh. 11 - Prob. 19ECh. 11 - (Appendix 11.1) Depreciation for Financial...Ch. 11 - Depreciation Methods Winsey Company purchased...Ch. 11 - Depreciation Methods Lord Company purchased a...Ch. 11 - Depreciation Methods Sayers Company purchased a...Ch. 11 - Cost of Asset and Depreciation Method Heist...Ch. 11 - Group and Composite Depreciation Chcadle Company...Ch. 11 - Borrell Company purchased four delivery trucks on...Ch. 11 - Dinnell Company owns the following assets: In the...Ch. 11 - Kam Company purchased a machine on January 2,...Ch. 11 - During 2019, Ryel Companys controller asked you to...Ch. 11 - Petes Petroleum, Inc., an SEC registrant with a...Ch. 11 - On January 1, 2014, Borstad Company purchased...Ch. 11 - Prob. 12PCh. 11 - Prob. 13PCh. 11 - Hunter Company purchased a light truck on January...Ch. 11 - Logan Corporation, a manufacturer of steel...Ch. 11 - On January 2, 2019, Brock Corporation purchased a...Ch. 11 - On December 31, 2019, Vail Company owned the...Ch. 11 - Soon after December 31, 2019, the auditor...Ch. 11 - Prob. 19PCh. 11 - Pell Corporations Property, Plant, and Equipment...Ch. 11 - Prob. 21PCh. 11 - Prob. 1CCh. 11 - Prob. 2CCh. 11 - Straight-Line and Composite Depreciation Portland...Ch. 11 - Depreciation continues to be one of the most...Ch. 11 - The following two statements concern depreciation:...Ch. 11 - Prob. 6C
Knowledge Booster
Similar questions
- During 2019, Ryel Companys controller asked you to prepare correcting journal entries for the following three situations: 1. Machine A was purchased for 50,000 on January 1, 2014. Straight-line depreciation has been recorded for 5 years, and the Accumulated Depreciation account has a balance of 25,000. The estimated residual value remains at 5,000, but the service life is now estimated to be 1 year longer than estimated originally. 2. Machine B was purchased for 40,000 on January 1, 2017. It had an estimated residual value of 5,000 and an estimated service life of 10 years. it has been depreciated under the double-declining-balance method for 2 years. Now, at the beginning of the third year, Ryel has decided to change to the straight-line method. 3. Machine C was purchased for 20,000 on January 1, 2018, Double-declining-balance depreciation has been recorded for 1 year. The estimated residual value of the machine is 2,000 and the estimated service life is 5 years. The computation of the depreciation erroneously included the estimated residual value. Required: Prepare any necessary correcting journal entries for each situation. Also prepare the journal entry necessary for each situation to record depreciation expense for 2019.arrow_forwardHawks Corporation’s Property, Plant and Equipment section of its statement of financial position as of December 31, 2019 included the following: Land P 400,000 Buildings 3,200,000 The following transactions occurred during 2020: Land site number 102 was acquired for P4,000,000. Additionally, to acquire the land the entity paid a P240,000 commission to a real estate agent. Costs of P60,000 were incurred to clear the land. During the course of clearing the land, timber and gravel were recovered and sold for P20,000. A second tract of land (site number 103) with a building was acquired for P1,200,000. Based on reliable information at the time of acquisition, fair value of land is P800,000 and the building P400,000. Shortly after acquisition, the building was demolished at a cost of P120,000. A new building was constructed for P1,600,000 plus the following costs: Excavation fees P 44,000 Architectural design fees 32,000 Building permit…arrow_forwardOn January 1, 2018, Bie Corp. purchased a new building at a cost of P3 million. Depreciation was computed on the straight line basis at 4% per year. On December 31, 2019, after recording the depreciation for the year, the building was appraised and was reported to have a fair value of P30 million and an estimated remaining life of fifteen years. This was the first revaluation made on the building since its acquisition. It is the company's policy to transfer a portion of the revaluation surplus to retained earnings as the asset is being used for its remaining life.What is the revaluation surplus balance reported in the financial statements at December 31, 2021?arrow_forward
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