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Chapter 5: BE5-4 (page 239)

Lowell Company鈥檚 December 31, 2017, trial balance includes the following accounts: Inventory \(120,000, Buildings \)207,000, Accumulated Depreciation鈥擡quipment \(19,000, Equipment \)190,000, Land (held for investment) \(46,000, Accumulated Depreciation鈥擝uildings \)45,000, Land \(71,000, and Timberland \)70,000. Prepare the property, plant, and equipment section of the balance sheet

Short Answer

Expert verified

The business entity's property, plant, and equipment total$474,000.

Step by step solution

01

Definition of Accumulated Depreciation

The total expense value of the fixed asset up to a certain date is known as accumulated depreciation. It is subtracted from the asset's acquisition value in the balance sheet to determine the book value of that underlying asset.

02

Property, Plant and Equipment Section

Particular

Amount $

Amount $

Land

$71,000

Building

$207,000

Less: Accumulated depreciation 鈥� building

(45,000)

162,000

Equipment

190,000

Less: Accumulated depreciation 鈥� equipment

(19,000)

171,000

Timberland

70,000

Total property, plant and equipment

$474,000

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Most popular questions from this chapter

Question: E5-3 (L02,3) (Classification of Balance Sheet Accounts) Assume that Fielder Enterprises uses the following headings on its balance sheet.

(a) Current assets

(g) Long-term liabilities

(b) Investments

(h) Capital stock

(c) Property, plant, and equipment

(i) Equity attribute to non-controlling interest

(d) Intangible assets

(i) paid-in-capital in excess of par

(e) Other assets

(k) Retained earnings

(f) Current liabilities

Instructions

Indicate by letter how each of the following usually should be classified. If an item should appear in a note to the financial statements, use the letter 鈥淣鈥� to indicate this fact. If an item need not be reported at all on the balance sheet, use the letter 鈥淴.鈥�

1. Prepaid insurance.

2. Stock owned in affiliated companies.

3. Unearned service revenue.

4. Advances to suppliers.

5. Unearned rent revenue.

6. Preferred stock.

7. Additional paid-in capital on preferred stock.

8. Copyrights.

9. Petty cash fund.

10. Sales taxes payable.

11. Accrued interest on notes receivable.

12. Twenty-year issue of bonds payable that will mature within the next year. (No sinking fund exists, and refunding is not planned.)

13. Machinery retired from use and held for sale.

14. Fully depreciated machine still in use.

15. Accrued interest on bonds payable.

16. Salaries that company budget shows will be paid to employees within the next year.

17. Discount on bonds payable. (Assume related to bonds payable in item 12.)

18. Accumulated depreciation鈥攂uildings.

19. Shares held by non-controlling stockholders.

The major classifications of activities reported in the statement of cash flows are operating, investing, and financing. Classify each of the transactions listed below as:

1. Operating activity鈥攁dd to net income.

2. Operating activity鈥攄educt from net income.

3. Investing activity.

4. Financing activity.

5. Reported as significant noncash activity.

The transactions are as follows.

(a) Issuance of common stock.

(h) Payment of cash dividends.

(b) Purchase of land and building.

(i) Exchange of furniture for office equipment.

(c) Redemption of bonds

(j) Purchase of treasury stock.

(d) Sale of equipment.

(k) Loss on sale of equipment.

(e) Depreciation of machinery.

(l) Increase in accounts receivable during the year.

(f) Amortization of patent.

(m) Decrease in accounts payable during the year.

(g) Issuance of bonds for plant assets.

What is the purpose of a free cash flow analysis?

Net income for the year for Carrie, Inc. was \(750,000, but the statement of cash flows reports that net cash provided by operating activities was \)860,000. What might account for the difference?

P5-4 (L03) GROUPWORK (Preparation of a Corrected Balance Sheet) The balance sheet of Kishwaukee Corporation as of December 31, 2017, is as follows.

KISHWAUKEE CORPORATION

Balance Sheet

December 31, 2017

Assets

Goodwill (Note 2)

\(120,000

Building (Note 1)

1,640,000

Inventory

312,100

Land

950,000

Accounts receivable

170,000

Treasury Stock (50,000 shares)

87,000

Cash on hand

175,900

Assets allocated to trustee for plant expansion

Cash in bank

70,000

Debt investment (held to maturity)

138,000

\)3,663,000

Equities

Note payable (Note 3)

\(600,000

Common stock authorized and issue, 1,000,000 shares no par

1,150,000

Retained earnings

103,000

Non-controlling Interest

55,000

Appreciation capital (Note 1)

570,000

Income tax payable

75,000

Reserve for depreciation recorded to the date of building

410,000

\)3,663,000

Note 1: Buildings are stated at cost, except for one building that was recorded at appraised value. The excess of appraisal value over cost was \(570,000. Depreciation has been recorded based on cost.

Note 2: Goodwill in the amount of \)120,000 was recognized because the company believed that book value was not an accurate representation of the fair value of the company. The gain of \(120,000 was credited to Retained Earnings.

Note 3: Notes payable are long-term except for the current installment due of \)100,000.

Instructions

Prepare a corrected classified balance sheet in good form. The notes above are for information only
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