Acc/422 Workbook 4 chapter 11 and 12

| September 29, 2018

Schultz Corporation began
operations on October 1, 2010.

The accounting department
of Schultz has started the fixed-asset and depreciation

schedule presented on
below. You have been asked to assist
in completing this schedule.

In addition to
ascertaining that the data already on the schedule are correct, you have

obtained the following
information from the company’s records and personnel.

1)
Depreciation is computed
from the first of the month of acquisition to the first of the

month of disposition.

2)
Land A and Building A
were acquired from a predecessor corporation.
Schultz paid

$ 1,050,000
for the land and building
together. At the time of acquisition,
the land

had an appraised value of
$ 110,000
and the building had an
appraised value of

$ 990,000
.

3)
Land B was acquired on
October 2, 2010, in exchange for
3,000
newly issued shares

of Schultz common
stock. At the date of acquisition, the
stock had a par value of

$5
per share and a fair
value of
$40
per share.

During October 2010,
Shultz paid
$25,000
to demolish an existing
building

on the land so it could
construct a new building.

4)
Construction of Building
B on the newly acquired land began on October 1, 2011. By

September 30, 2012,
Schultz had paid
$320,000
on the estimated total
construction

costs of
$450,000
. It is estimated that the building will be
completed and

occupied by July 2013.

5)
Certain equipment was
donated to the corporation by a local university. An independent

appraisal of the
equipment when donated placed the fair market value at
$60,000

and the salvage value at
$6,000
.

6)
Machinery A’s total cost
of
$175,900
includes installation
expense of
$600

and normal repairs and
maintenance of
$16,900
. Salvage value is estimated at

$8,000
. Machinery A was sold on February 1,
2012.

7)
On October 1, 2011,
Machinery B was acquired with a down payment of
$7,600

and the remaining
payments to be made in 11 annual installments of
$9,000

each beginning October 1,
2011. The prevailing interest rate
was
8%
. The

following data was
abstracted from present-value tables (rounded).

Present value of $1.00 at 8%

Present value of a
ordinary annuity of $1.00 at 8%

10 years
0.463

10 years
6.71

11 years
0.429

11 years
7.139

15 years
0.315

15 years
8.559

Schultz Corporation

Fixed Asset Depreciation Schedule

For Fiscal Years Ended September 30, 2011 and
September 30, 2012

Depreciation Expense Year Ended September 30

Assets
Acquisition Date
Cost
Salvage
Depreciation
Method
Estimated Life
in Years
2011
2012

Land A
1/10/2010
(1)
N/A
N/A
N/A
N/A
N/A

Building A
1/10/2010
(2)
$60,000
Straight-line
(3)
$22,125
(4)

Land B
2/10/2010
(5)
N/A
N/A
N/A
N/A
N/A

Building B
Under
Construction
$320,000
0
Straight-line
30
0
(6)

Donated Equipment
2/10/2010
(7)
6,000
150%
declining balance
10
(8)
(9)

Machinery A
2/10/2010
(10)
8,000
Sum-of-the-years’-digits
8
(11)
(12)

Machinery B
1/10/2011
(13)
0
Straight-line
20
0
(14)

N/A – Not applicable

Instructions:

For each numbered item on the
schedule above, supply the correct amount.
Round each answer

to the nearest dollar.

Answers

Calculations and/or explanations

(1)

(2)

(3)

years

(4)

(5)

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