Problem Topik 21Problem Topik 21Aktiva Tetap Berwujud dan

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P21-1 P21-1 Ripley Company was organized on January. During the first year of Ripley Company was organized on January. During the first year of operations, the following plant asset expenditures and receipts were operations, the following plant asset expenditures and receipts were recorded in random orderrecorded in random order

Debit

1. Accrued real estate taxes paid at time of purchase of real estate2. Real estate taxes on land paid for the current year3. Full payment to building contractor 4. Excavation cost for new building 5. Cost of real estate purchased as a plant site (land $100,000 and

building $25,0006. Cost of parking lots and driveways7. Architect’s fees on building plants8. Installation cost of fences around property9. Cost of demolishing building to make land suitable for

construction of new building

Credit

10. Proceeds from salvage of demolished building

$ 2,0003,000

600,00025,000

125,00015,00010,000

4,000

21,000805,000

2,500

Solution 21-1 Item Land Building Other Accounts 1 2 3 4 5 6 7 8 9 10

($ 2,000)

125,000

( 21,000) ( (2,500) ($145,500)

$600,000 25,000

10,000

$635,000

$ 3,000 Property Taxes Expense 15,000 Land Improvements 4,000 Land Improvements

Instructions

Analyze the foregoing transaction using the following column headings. Insert the number of each transaction in the Item space, and insert the amounts in the appropriate columns. For amounts entered in the Other Accounts column, also indicate the account title

P21-2 At December 31, 2005, Walton Company reported P21-2 At December 31, 2005, Walton Company reported the following as plant assetsthe following as plant assets

LandBuildingsLess: Accumulated depreciation-

buildingsEquipmentLess: Accumulated depreciation-

equipmentTotals plant assets

$ 3,000,000$ 26,500,000

12,100,000 14,400,000 40,000,000 5,000,000 35,000,000

$52,400,000

During 2006, the following selected cash transaction occurred

April 1 Purchased land for 2,200,000

May 1 Sold equipment that cost $750,000 when purchased on January 1, 2002. The equipment was sold for $460,000

June 1 Sold land purchased on June 1, 1996, for $1,800,000. The land cost $300,00.

July 1 Purchased equipment for $2,400,000

Dec 31 Retired equipment that cost $500,000 when purchased on December 31, 1996. No salvage value was received

Instructions

a) Journalize the above transaction. Walton uses straight-line depreciation for building and equipment. The buildings are estimated to have a 50-year useful life and no salvage value. The equipment is estimated to have a 1 year useful life and no salvage value. Update depreciation on assets disposed of at the time of sale or retirement.

b) Record adjusting entries for depreciation for 2006.

c) Prepare the plant assets section of Walton’s balance sheet at December 31, 2006.

Solution 21-2Solution 21-2

(a) Apr. 1 Land................................................... 2,200,000 Cash........................................... 2,200,000 May 1 Depreciation Expense..................... 25,000 Accumulated Depreciation— Equipment ............................ 25,000 ($750,000 X 1/10 X 4/12) 1 Cash .................................................. 460,000 Accumulated Depreciation— Equipment .................................... 325,000 Equipment................................. 750,000 Gain on Disposal ..................... 35,000 Cost $750,000 Accum. depreciation— equipment 325,000 [($750,000 X 1/10 X 4) + $25,000] Book value 425,000 Cash proceeds 460,000 Gain on disposal $ 35,000

June 1 Cash .................................................. 1,800,000 Land........................................... 300,000 Gain on Disposal ..................... 1,500,000 July 1 Equipment ........................................ 2,400,000 Cash........................................... 2,400,000 Dec. 31 Depreciation Expense..................... 50,000 Accumulated Depreciation— Equipment ............................ 50,000 ($500,000 X 1/10) 31 Accumulated Depreciation— Equipment .................................... 500,000 Equipment................................. 500,000 Cost $500,000 Accum. depreciation— equipment 500,000 ($500,000 X 1/10 X 10) Book value $ 0

(b) Dec. 31 Depreciation Expense ..................... 530,000 Accumulated Depreciation— Buildings............................... 530,000 ($26,500,000 X 1/50) 31 Depreciation Expense ..................... 3,995,000 Accumulated Depreciation— Equipment ............................ 3,995,000 ($38,750,000* X 1/10) $3,875,000 [($2,400,000 X 1/10) X 6/12] 120,000 $3,995,000 *($40,000,000 – $750,000 – $500,000)

(c) WALTON COMPANY Partial Balance Sheet December 31, 2006 Plant Assets* Land....................................................... $ 4,900,000 Buildings............................................... $26,500,000 Less: Accumulated depreciation— buildings................................ 12,630,000 13,870,000 Equipment............................................. 41,150,000 Less: Accumulated depreciation— equipment ............................. 8,245,000 32,905,000 Total plant assets......................... $51,675,000 *See T-accounts which follow.

Land Bal. 3,000,000 Apr. 1 2,200,000

June 1 300,000

Bal. 4,900,000

Buildings Bal. 26,500,000 Bal. 26,500,000

Accumulated Depreciation—Buildings Bal. 12,100,000

Dec. 31 adj. 530,000 Bal. 12,630,000

Equipment Bal. 40,000,000 July 1 2,400,000

May 1 750,000 Dec. 31 500,000

Bal. 41,150,000

Accumulated Depreciation—Equipment May 1 325,000 Dec. 31 500,000

Bal. 5,000,000 May 1 25,000 Dec. 31 50,000 Dec. 31 adj. 3,995,000

Bal. 8,245,000

Jan. 2 Paid $18,000 legal cost to successfully defend the patent against infringement by another company

Jan.-June Develop a new product, incurring $140,000 in research and development costs. A patent was granted for the product on July 1. Its useful life is equal to its legal life.

Sept. 1 Paid $50,000 to an extremely large defensive lineman to appear in commercials advertising the company’s products. The commercials will air in September and October.

Oct. 1 Acquired a franchise for $80,000. The franchise has a useful life of 50 years.

P21-3 P21-3 The intangible assets section of Whitley Company at The intangible assets section of Whitley Company at December 31, 2005, is presented belowDecember 31, 2005, is presented below

Instructiona) Prepare journal entries to record the transaction above

b) Prepare journal entries to record the 2006 amortization expense.

c) Prepare the intangible assets section of the balance sheet at December 31, 2006.

(a) Jan. 2 Patents ..................................................... 18,000 Cash.................................................. 18,000 Jan.- Research and Development June Expense ............................................... 140,000 Cash.................................................. 140,000 Sept. 1 Advertising Expense .............................. 50,000 Cash.................................................. 50,000 Oct. 1 Franchise ................................................. 80,000 Cash.................................................. 80,000 (b) Dec. 31 Amortization Expense—Patents........... 9,000 Patents ............................................. 9,000 [($70,000 X 1/10) + ($18,000 X 1/9)]

31 Amortization Expense—Franchise....... 5,200 Franchise ......................................... 5,200 [($48,000 X 1/10) + ($80,000 X 1/50 X 3/12)]

Solution 21-3

(c) Intangible Assets Patents ($88,000 cost – $16,000 amortization) (1) ............... $ 72,000 Franchise ($128,000 cost – $24,400 amortization) (2) ......... 103,600 Total intangible assets .................................................... $175,600 (1) Cost ($70,000 + $18,000); amortization ($7,000 + $9,000). (2) Cost ($48,000 + $80,000); amortization ($19,200 + $5,200).