Sheryl crow corporation a manufacturerof steel products

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Reference no: EM13481929

(Comprehensive Depreciation Computations) Sheryl Crow Corporation, a manufacturerof steel products, began operations on October 1, 2006. The accountingdepartment of Crow has started the fixed-asset and depreciation schedulepresented on page 563. You have been asked to assist in completing thisschedule. In addition to ascertaining that the data already on theschedule are correct, you have obtained the following information fromthe company's records and personnel.

Depreciation is computed from the first of the month of acquisition to the first of the month of disposition.
Land A and Building A were acquired from a predecessor corporation. Crow paid $820,000 for the land and building together. At the time of acquisition, the land had an appraised value of $90,000, and the building had an appraised value of $810,000.
Land B was acquired on October 2, 2006, in exchange for 2,500 newly issued shares of Crow's common stock. At the date of acquisition, the stock had a par value of $5 per share and a fair value of $30 per share. During October 2006, Crow paid $16,000 to demolish an existing building on this land so it could construct a new building.
Construction of Building B on the newly acquired land began on October 1, 2007. By September 30, 2008, Crow had paid $320,000 of the estimated total construction costs of $450,000. It is estimated that the building will be completed and occupied by July 2009.
Certain equipment was donated to the corporation by a local university. An independent appraisal of the equipment when donated placed the fair market value at $30,000 and the salvage value at $3,000.
Machinery A's total cost of $164,900 includes installation expense of $600 and normal repairs and maintenance of $14,900. Salvage value is estimated at $6,000. Machinery A was sold on February 1, 2008.
On October 1, 2007, Machinery B was acquired with a down payment of $5,740 and the remaining payments to be made in 11 annual installments of $6,000 each beginning October 1, 2007. The prevailing interest rate was 8%. The following data were abstracted from present-value tables (rounded).

Present value of $1.00 at 8%		Present value of an ordinary annuity of $1.00 at 8%
10 years	.463	10 years	6.710
11 years	.429	11 years	7.139
15 years	.315	15 years	8.559

SHERYL CROW CORPORATION
Fixed Asset and Depreciation Schedule
For Fiscal Years Ended September 30, 2007, and September 30, 2008
Assets	Acquisition Date	Cost	Salvage	Depreciation Method	Estimated Life in Years	Depreciation Expense Year Ended September 30
Assets	Acquisition Date	Cost	Salvage	Depreciation Method	Estimated Life in Years	2007	2008
Land A	October 1, 2006	$ (1)	N/A	N/A	N/A	N/A	N/A
Building A	October 1, 2006	(2)	$40,000	Straight-line	(3)	$17,450	(4)
Land B	October 2, 2006	(5)	N/A	N/A	N/A	N/A	N/A
Building B	Under Construction	$320,000 to date	-	Straight-line ª' x.Hmtd>	30	-

Reference no: EM13481929

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