Question

Question 4 At December 31, 2016, Grouper SA reported the following as plant assets. Land € 2,866,000 Buildings €29,773,000 Less: Accumulated depreciation-buildings 12,929,000 16,844,000 Equipment 39,084,000 Less: Accumulated depreciation-equipment 4,622,000 34,462,000     Total plant assets €54,172,000 During 2017, the following selected cash transactions occurred. April 1 Purchased land for €2,458,000. May 1 Sold equipment that cost €801,000 when purchased on January 1, 2013. The equipment was sold for €496,620. June 1 Sold land purchased on June 1, 2007 for €1,880,000. The land cost €304,000. July 1 Purchased equipment for €2,435,000. Dec. 31 Retired equipment that cost €561,000 when purchased on December 31, 2007. No residual value was received. Journalize the above transactions. The company uses straight-line depreciation for buildings and equipment. The buildings are estimated to have a 50-year life and no residual value. The equipment is estimated to have a 10-year useful life and no residual value. Update depreciation on assets disposed of at the time of sale or retirement. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Apr. 1May 1June 1July 1Dec. 31 Apr. 1May 1June 1July 1Dec. 31 (To record depreciation) May 1 (To record sale of equipment) Apr. 1May 1June 1July 1Dec. 31 Apr. 1May 1June 1July 1Dec. 31 Apr. 1May 1June 1July 1Dec. 31 (To record depreciation) Apr. 1May 1June 1July 1Dec. 31 (To record retirement of equipment) Record adjusting entries for depreciation for 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31 (To record building depreciation) Dec. 31 (To record equipment deprecition) Prepare the plant assets section of Grouper’s statement of financial position at December 31, 2017. (List Property, plant and equipment in order of land, buildings and equipment.)

Answer 1

Credit Solution: Journal entries | Date General journal 01-04-17 Land Cash (To record purchase of land for cash) Debit € 2,458,000 € 2,458,000 € 26,700 € 26,700 01-05-17 Depreciation expense Accumulated depreciation - Equipment (801,000*1/10*4/12) (To record deprection on Equipment) € 496,620 € 347,100 01-05-17 Cash Accumulated depreciation {[€801,000 1/10 x 4]+ € 26,700 } Equipment Gain on Disposal of Plant Assets (To record the sale of Equipment € 496,620 - (€ 801,000 - {[€801,000 1/10 x 4]+ € 26,700 }) € 801,000 € 42,720 € 1,880,000 01-06-17 Cash Land Gain on Disposal of Plant Assets (To record the sale of Land) € 304,000 € 1,576,000 € 2,435,000 01-07-17 Equipment Cash (To record the Purchase of Equipment) € 2,435,000 € 56,100 31-12-17 Depreciation expense (€ 561,000 < 1/10) Accumulated depreciation - Equipment (To record depreciation expenses) €56,100 € 561,000 31-12-17 Accumulated depreciation - Equipment Equipment (To record retirement of equipment) € 561,000 Credit 2 Adjusting entries for depreciation of 2017 Date General journal 31-12-17 Depreciation expense (€ 29,773,000/50) Accumulated depreciation - Building (To record building depreciation) Debit € 595,460 € 595,460 € 3,893,950 €3,893,950 31-12-17 Depreciation expense Accumulated depreciation - Equipment (39,084,000 - 801,000 - 561,000) *1/10 (2,435,000*1/10)*6/12 Total (To record equipment depreciation) € 3,772,200 € 121,750 €3,893,950 3 Plant asset section Grand's balance sheet at 12.31.2017 Plant Assets Land Buildings less: Accumulated Depreciation - Buildings € 5,020,000 € 29,773,000 € 13,524,460 € 16,248,540 Equipment less: Accumulated Depreciation - Equipments € 40,157,000 € 7,690,650 € 32,466,350 € 53,734,890 Total plant assets Calculations Land = € 2,866,000+ € 2,458,000 - € 304,000 = € 5,020,000 Accumulated Depreciation - Buildings = € 12,929,000+ € 595,460 = € 13,524,460 Equipment = € 39,084,000 - € 801,000+ € 2,435,000 - € 561,000 = € 40,157,000 Accumulated Depreciation - Equipments = € 4,622,000+ € 26,700 - € 347,100+ €56,100 - €561,000+ € 3,893,950 = € 7,690,650