Your analysis of Moen Corporation's fixed asset accounts at year end reveals the following information: 1. Moen owns two tracts of land. The first, which cost $18,000, is being held as a future building site. It has a current market value of $20,000. The second, which cost $19,000, was purchased 10 years ago. The current office and factory buildings are on this site. The land has a current market value of $56,000. 2. Moen owns two buildings. The office building and the factory building were both built 10 years ago at a cost of $50,000 and $120,000, respectively. At that time, each was expected to have a life of 30 years and a residual value of 10% of original cost. They are being depreciated on a straight-line basis. 3. Moen owns factory machinery with a total cost of $51,000 and accumulated depreciation of $35,300. Included in factory machinery is one machine that cost $7,000 and has accumulated depreciation of $4,200. This machine is being held for resale and is not being used in operations. 4. Moen owns office equipment that cost $14,500 and has a book value of $6,300. It owns office furniture that cost $17,900 and has a book value of $11,400. Required: Prepare the property, plant, and equipment section of Moen’s year end balance sheet
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.
Plant and Equipment Your analysis of Moen Corporation's fixed asset accounts at year
end reveals the following information:
1. Moen owns two tracts of land. The first, which cost $18,000, is being held as a
future building site. It has a current market value of $20,000. The second, which
cost $19,000, was purchased 10 years ago. The current office and factory
buildings are on this site. The land has a current market value of $56,000.
2. Moen owns two buildings. The office building and the factory building were
both built 10 years ago at a cost of $50,000 and $120,000, respectively. At that
time, each was expected to have a life of 30 years and a residual value of 10% of
original cost. They are being
3. Moen owns factory machinery with a total cost of $51,000 and
depreciation
$7,000 and has accumulated depreciation of $4,200. This machine is being held
for resale and is not being used in operations.
4. Moen owns office equipment that cost $14,500 and has a book value of $6,300.
It owns office furniture that cost $17,900 and has a book value of $11,400.
Required:
Prepare the property, plant, and equipment section of Moen’s year end
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 1 images
