Question

At December 31, 2020, Cord Company's plant asset and accumulated depreciation and amortization accounts had balances as follows:

Category	Plant Asset				Accumulated Depreciation and Amortization
Land	$	185,000			$	—
Buildings		2,000,000				338,900
Equipment		1,625,000				327,500
Automobiles and trucks		182,000				110,325
Leasehold improvements		236,000				118,000
Land improvements		—				—

Depreciation methods and useful lives:
Buildings—150% declining balance; 25 years.
Equipment—Straight line; 10 years.
Automobiles and trucks—200% declining balance; 5 years, all acquired after 2017.
Leasehold improvements—Straight line.
Land improvements—Straight line.

Depreciation is computed to the nearest month and residual values are immaterial. Transactions during 2021 and other information:

1. On January 6, 2021, a plant facility consisting of land and building was acquired from King Corp. in exchange for 35,000 shares of Cord's common stock. On this date, Cord's stock had a fair value of $60 a share. Current assessed values of land and building for property tax purposes are $255,000 and $595,000, respectively.
2. On March 25, 2021, new parking lots, streets, and sidewalks at the acquired plant facility were completed at a total cost of $252,000. These expenditures had an estimated useful life of 12 years.
3. The leasehold improvements were completed on December 31, 2017, and had an estimated useful life of eight years. The related lease, which would terminate on December 31, 2023, was renewable for an additional four-year term. On April 30, 2021, Cord exercised the renewal option.
4. On July 1, 2021, equipment was purchased at a total invoice cost of $335,000. Additional costs of $11,000 for delivery and $60,000 for installation were incurred.
5. On September 30, 2021, Cord purchased a new automobile for $13,500.
6. On September 30, 2021, a truck with a cost of $25,000 and a book value of $11,000 on date of sale was sold for $12,500. Depreciation for the nine months ended September 30, 2021, was $2,475.
7. On December 20, 2021, equipment with a cost of $22,000 and a book value of $3,225 at date of disposition was scrapped without cash recovery.

Required:

2. For each asset category, prepare a schedule showing depreciation or amortization expense for the year ended December 31, 2021.

For each asset category, prepare a schedule showing depreciation or amortization expense for the year ended December 31, 2021. (Do not round intermediate calculations. Round your final answers to nearest whole dollar.) CORD COMPANY Depreciation and Amortization Expense For the Year Ending December 31, 2021 Land Improvements Buildings Equipment Automobiles and trucks Leasehold improvements Total depreciation and amortization expense for 2021 < Required 1 Required 2 >

Answer 1

Depreciation and amortization expense will be as follows: -

Cord Company
Depreciation and Amortization Expense
For the Year Ended December 31, 2021
Land Improvements	15,750
Buildings	187,866
Machinery and Equipment	182,800
Automobiles and trucks	27,105
Leasehold improvements	23,600
Total Depreciation and amortization expense for 2021	437,121

Working Notes: -

Calculation of Depreciation and Land Improvements
Cost of land improvements	252,000
Estimated life	12
Method of Depreciation	Straight Line method
Depreciation on land improvement per year	21,000	252000/12
Depreciation on land improvement during the year	15,750	21000*9/12
Depreciation on Buildings
Cost of Building	2,000,000
Accumulated Depreciation	338,900
Book Value of Buildings	1,661,100	2000000-338900
Add: Purchase cost of equipment	1,470,000	35000*60*595000/(255000+595000)
Net book value of Buildings	3,131,100	1661100+1470000
Life in years	25
Depreciation method (Declining Method)	150%
Depreciation	187,866	3131100*150%/25
Depreciation on Machinery and Equipment
Cost of Machinery and equipment	1,625,000
Cost of Machinery and equipment acquired	406,000	335000+11000+60000
Estimated useful life	10
Depreciation Method	Straight line method
Derpreciation Expenses
Old Machinery and Equipment for full year	162,500	1625000/10
Machinery and Equipment purchased for 6 months	20,300	406000/10*6/12
Total Derpreciation and Machinery and Equipment	182,800	162500+20300
Depreciation on Automobiles and trucks
Cost of Automobiles and Truck	182,000
Less: Accumulated Depreciation	110,325
Book Value	71,675	182000-110325
Less: book value of truck sold	13,475	11000+2475
Net Book value of automobiles and truck subject to depreciation	58,200	71675-13475
Automobiles acquired	13,500
Estimated Life	5
Depreciation method(declining balance method)	200%
Calculation of Depreciation on Automobile and trucks
On old Automobile and trucks	23,280	58200*200%/2
on Net truck for 3 months	1,350	13500*200/2*3/12
Depreciation on Truck sold	2,475
Total Depreciation	27,105	23280+1350+2475
Depreciation on Leasehold improvement
Cost of Leasehold Improvement	236,000
Less: Accumulated Depreciation	118,000
Book value	118,000	236000-118000
Amortization Period	5
Amortization for leasehold improvements	23,600	118000/5