The Thompson Corporation, manufacturer of steel products, began operations on October 1, 2009. The accounting departmen

$16.00

Description

The Thompson Corporation, manufacturer of steel
products, began operations on October 1, 2009.
The accounting department of Thompson has started the fixed- asset and
depreciation schedule presented below.
You have been asked to assist in completing this schedule. In addition to ascertaining that the data
already on the schedule are correct, you have obtained the following
information from the company’s records and personnel:

a. Depreciation
is computed from the first of the month acquisition to the first of the month
of disposition.

b. Land
A and Building A were acquired from a predecessor corporation. Thompson paid
812,000 for the land and building together.
At the time of acquisition, the land had a fair value of 72,000 and the
building had a fair value of 828,000.

c. Land
b was acquired on October 2, 2009, in exchange for 3,000 newly issued shares of
Thompson’s common stock. At the date of
acquisition, the stock had a par value of $5 per share and a fair value of $25
per share. During October 2009, Thompson
paid $10,400 to demolish an existing building on this land so it could
construct a new building.

d. Construction
of Building B on the newly acquired land began on October 1, 2010. By September 30, 2011, Thompson had paid
$210,000 of the estimated total construction costs of $300,000. Estimated completion and occupancy are July
2012.

e. E.
Certain equipment was donated to the corporation by the city. An independent appraisal of the equipment
when donated placed the fair value of $16,000 and the residual value at $2,000.

f. Machine
A’s total cost of $110,000 includes installation charges of $550 and normal
repairs and maintenance of $11,000. Residual value is estimated at 5,500. Machine A was sold on February 1, 2011.

g. On
October 1, 2010, Machine B was acquired with a down payment of $4,000 and the
remaining payments to be made in 10 annual installments of $4,000 each
beginning October 1, 2011. The
prevailing interest rate was 8% .

Fixed
Asset and Depreciation Schedule

For
Fiscal Years Ended September 30, 2010 and September 30, 2011

Depreciation
for

Year
Ended 9/30

Assets

Acquisition
Date

Cost

Residual

Depreciation
Method

Estimated
Life in Years

2010

2011

Land
A

10/1/2009

(1)

N/A

N/A

N/A

N/A

N/A

Building
A

10/1/2009

(2)

47,500

SL

(3)

14,000

(4)

Land
B

10/2/2009

(5)

N/A

N/A

N/A

N/A

N/A

Building
B

under
construction

210,000
to date

SL

30

(6)

Donated
Equipment

10/2/2009

(7)

2,000

150%
declining balance

10

(8)

(9)

Machine
A

10/2/2009

(10)

5,500

Sum-of-the-digits

10

(11)

(12)

Machine
B

10/1/2010

(13)

SL

15

_

(14)

N/A=
Not Applicable

Required:Supply the correct amount for each
numbered item on the schedule. Round
each answer to the nearest dollar. (AICPA adapted)

Reviews

There are no reviews yet.

Be the first to review “The Thompson Corporation, manufacturer of steel products, began operations on October 1, 2009. The accounting departmen”

Your email address will not be published. Required fields are marked *