Reference no: EM131001613
The plant asset and accumulated depreciation accounts of Pell Corporation had the following balances at December 31, 2010:
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Transactions during 2011 were as follows:
a. On January 2, 2011, machinery and equipment were purchased at a total invoice cost of $260,000, which included a $5,500 charge for freight. Installation costs of $27,000 were incurred.
b. On March 31, 2011, a machine purchased for $58,000 in 2007 was sold for $36,500. Depreciation recorded through the date of sale totaled $24,650.
c. On May 1, 2011, expenditures of $50,000 were made to repave parking lots at Pell's plant location. The work was necessitated by damage caused by severe winter weather.
d. On November 1, 2011, 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 $38 per share. Pell paid legal fees and title insurance totaling $23,000. Shortly after acquisition, the building was razed at a cost of $35,000 in anticipation of new building construction in 2012.
e. On December 31, 2011, Pell purchased a new automobile for $15,250 cash and trade-in of an old automobile purchased for $18,000 in 2007. Depreciation on the old automobile recorded through December 31, 2011, totaled $13,500. The fair value of the old automobile was $3,750.
Required:
1. Prepare a schedule analyzing the changes in each of the plant assets during 2011, with detailed supporting computations.
2. Prepare a schedule showing the gain or loss from each asset disposal that would be recognized in Pell's income statement for the year ended December 31,2011.
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