Reference no: EM132936098

The plant asset and accumulated depreciation accounts of Pell Corporation had the following balances at December 31, 2020:

                                                 Plant Asset                   Accumulated Depreciation
Land                                    $395,000                         $0
Land improvements                  193,500                      54,000
Building                               1,590,000                       395,000
Equipment                           1,248,000                    450,000
Automobiles                          159,000                    116,500

Transactions during 2021 were as follows:

• On January 2, 2021, equipment were purchased at a total invoice cost of $305,000, which included a $6,400 charge for freight. Installation costs of $36,000 were incurred.
• On March 31, 2021, a small storage building was donated to the company. The person donating the building originally purchased it three years ago for $34,000. The fair value of the building on the day of the donation was $21,400.
• On May 1, 2021, expenditures of $59,000 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.
• On November 1, 2021, 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 $47 per share. Pell paid legal fees and title insurance totaling $27,500. Shortly after acquisition, the building was razed at a cost of $44,000 in anticipation of new building construction in 2022.
• On December 31, 2021, Pell purchased a small storage building by giving $17,500 cash and an old automobile purchased for $22,500 in 2014. Depreciation on the old automobile recorded through December 31, 2021, totaled $16,875. The fair value of the old automobile was $4,200.

Required:

Problem 1: For each asset classification, prepare a schedule showing depreciation for the year ended December 31, 2021, using the following depreciation methods and useful lives:

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 42,500 miles in 2021.