Comprehensive problem on amortization

Reference no: EM1362299

Comprehensive problem on amortization:
1st January 2006, Maple Leaf Corporation reported the following property, plant, equipments.

Assets Cost Estimated life Salvage value Accumulated amortization
Land 4500000 N.A. Nil
Building 6000000 40 years Nil 3300000
Equipment 2000000 10 years Nil 1250000

During 2006 following transactions occurred.

Date Transactions Amount
April 1 Sold equipment that cost $500,000 when purchased on Jan 1 1998 160000
May 1 Purchased land for 2460,000 and legal charges for registration of title deeds paid $40000 2500000
Aug 1 Sold land for 1400,000, Received $540,000 cash and a five year 6% Note payable for the balance. The land cost $600000.
July 1 Purchased equipment for cash 1500000
Dec 31 Retired equipment that cost $400000 when purchased

Instructions:
1 Calculate amount of amortization expense for 2006 in respect of each asset given above under straight line method.
2 Record journal entries for the above transactions
3 Record adjusting entries at Dec 31 2006.
4 Prepare Property, plant and equipment section of the partial Balance sheet at December 31 2006..

Reference no: EM1362299

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