Beruflich Dokumente
Kultur Dokumente
Class: McGraw-Hill/Irwin
Problem 10-03
Requirement 1:
Hint: "Increases" come from the "Explanations of Amounts" below the table. "Decreases" come from assets
that have been sold or traded in.
PELL CORPORATION
Analysis of Change in Plant Assets
For the Year Ended December 31, 2011
Land
Land improvements
Building
Machinery and equipment
Automobiles
Totals
Balance
12/31/2010
$
350,000
180,000
1,500,000
1,158,000
150,000
$ 3,338,000
Correct!
Explanations of Amounts:
Cost of land acquired 11/1/2011:
Pell stock exchanged
Legal fees and title insurance
Razing existing building
Increase
$
438,000
287,000
19,000
744,000
Decrease
Correct!
58,000
18,000
76,000
Correct!
380,000
23,000
35,000
438,000
Correct!
$
$
260,000
27,000
287,000
Correct!
$
$
3,750
15,250
19,000
Correct!
Requirement 2:
PELL CORPORATION
Gain or Loss From Plant Asset Disposals
For the Year Ended December 31, 2011
Sale of machine on 3/31/2011:
Selling price
Less: Book value on machine
Gain on sale of machine
$
$
36,500
(33,350)
3,150
Correct!
4,500
(3,750)
Balance
12/31/2011
$
788,000
180,000
1,500,000
1,387,000
151,000
$ 4,006,000
Correct!
Loss on trade-in
750
Correct!
350,000
180,000
1,500,000
1,158,000
150,000
$
$
$
$
$
$
$
260,000
5,500
27,000
58,000
36,500
24,650
50,000
10,000
38
23,000
35,000
15,250
18,000
13,500
3,750
$
$
$
$
$
$
$
$45,000
350,000
405,000
112,000
$ 1,000,000
600,000
800,000
600,000
$ 3,000,000
12/
10/
6/
3/
12
12
12
12
1,000,000
500,000
400,000
150,000
2,050,000
Correct!
Interest capitalized
$ 2,050,000
10%
205,000
Correct!
2012:
Expenditures for 2012:
January 1, 2012
January 31, 2012
April 30, 2012
August 31, 2012
Accumulated expenditures
Average accumulated expenditures
$ 3,205,000
270,000
585,000
900,000
$ 4,960,000
9/
8/
5/
1/
9
9
9
9
3,205,000
240,000
325,000
100,000
3,870,000
Correct!
Interest capitalized
$ 3,000,000
870,000
$ 3,870,000
10%
7.2%
9/12 $
9/12
$
225,000
46,980
271,980
Correct!
6%
8%
7.2%
$
$
Correct!
Requirement 2:
Accumulated expenditures 9/30/2012,
before interest capitalization
2012 interest capitalized
Total cost of building
240,000
480,000
720,000
Correct!
$ 4,960,000
271,980
$ 5,231,980
Correct!
Requirement 3:
2011:
$ 3,000,000
4,000,000
6,000,000
10%
6%
8%
$
$
300,000
240,000
480,000
1,020,000
(205,000)
815,000
Correct!
2012:
Total interest incurred
Less: Interest capitalized
2012 interest expense
$
$
1,020,000
(271,980)
748,020
Correct!
$ 1,000,000
600,000
800,000
600,000
270,000
585,000
900,000
$ 3,000,000
10%
$ 4,000,000
6%
$ 6,000,000
8%
12/
10/
6/
3/
12
12
12
12
$ 1,000,000
500,000
400,000
150,000
$ 2,050,000
Correct!
Interest capitalized
$2,050,000
7.85%
160,925
Correct!
3,000,000
4,000,000
6,000,000
$ 13,000,000
Correct!
10%
6%
8%
7.85%
300,000
240,000
480,000
$ 1,020,000
Correct!
2012:
Expenditures for 2012:
January 1, 2012
$ 3,160,925
January 31, 2012
270,000
April 30, 2012
585,000
August 31, 2012
900,000
Accumulated expenditures
$ 4,915,925
Average accumulated expenditures
Correct!
9/
8/
5/
1/
9
9
9
9
$ 3,160,925
240,000
325,000
100,000
$ 3,825,925
Correct!
Interest capitalized
$3,825,925
7.85%
9/12 $
Correct!
225,251
Correct!
Requirement 2:
Accumulated expenditures 9/30/2012,
before interest capitalization $ 4,915,925
2012 interest capitalized
225,251
Total cost of building
$ 5,141,176
Correct!
Requirement 3:
2011:
3,000,000
4,000,000
6,000,000
10%
6%
8%
300,000
240,000
480,000
$ 1,020,000
(160,925)
$
859,075
Correct!
2012:
Total interest incurred
Less: Interest capitalized
2012 interest expense
$1,020,000
(225,251)
$794,749
Correct!
$ 1,000,000
600,000
800,000
600,000
270,000
585,000
900,000
$ 3,000,000
10%
$ 4,000,000
6%
$ 6,000,000
8%