Reference no: EM132781373

problem 1: A company hires a company to use a dirt moving machine to level out the land prior to constructing a new building. Another company came in to dig the footings and pour the concrete basement later. The cost of leveling the land would be debited to an account called Land Improvements and depreciated over the life of the new building.

True or False

problem 2: A plant asset had an initial cost of $72,000 and an estimated life of 5 years. A residual value of $12,000 has been used to take two full years worth of depreciation. Now the company has new information that leads them to believe they will keep then machine for a TOTAL of 10 yrs from the date of initial purchase then sell it for approximately $2000. What entry or entries will they make to record/adjust the depreciation for the third full year of life?

problem 2: A plant asset with a cost of $43,000 and accumulated depreciation of $12,000 was given together with $15,000 in exchange for a similar asset with a list price of $50,000. They could probably have bought the new asset for $47,000 if paid cash with no trade in. The trade is considered to have commercial substance. Show the entry for the trade in complete with gain or loss, if any.