Kohlbeck Corporation a manufacturer of steel products began

Kohlbeck Corporation, a manufacturer of steel products, began operations on October 1, 2013. The accounting department of Kohlbeck has started the fixed-asset and depreciation schedule presented 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.

Present value
of $1.00 at 8%

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

Complete the schedule below. (Round answers to 0 decimal places, e.g. 45,892.)

KOHLBECK CORPORATION
Fixed-Asset and Depreciation Schedule
For Fiscal Years Ended September 30, 2014, and September 30, 2015

Depreciation
Expense
Year Ended
September 30

Assets

Acquisition Date

Cost

Salvage

Depreciation Method

Estimated Life in Years

2014

2015

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. Kohlbeck paid $803,970 for the land and building together. At the time of acquisition, the land had an appraised value of $95,700, and the building had an appraised value of $861,300.
3.		Land B was acquired on October 2, 2013, in exchange for 3,400 newly issued shares of Kohlbeck’s common stock. At the date of acquisition, the stock had a par value of $6 per share and a fair value of $35 per share. During October 2013, Kohlbeck paid $16,440 to demolish an existing building on this land so it could construct a new building.
4.		Construction of Building B on the newly acquired land began on October 1, 2014. By September 30, 2015, Kohlbeck had paid $321,460 of the estimated total construction costs of $455,860. It is estimated that the building will be completed and occupied by July 2016.
5.		Certain equipment was donated to the corporation by a local university. An independent appraisal of the equipment when donated placed the fair value at $48,030 and the salvage value at $4,090.
6.		Machinery A’s total cost of $184,140 includes installation expense of $820 and normal repairs and maintenance of $15,940. Salvage value is estimated at $7,120. Machinery A was sold on February 1, 2015.
7.		On October 1, 2014, Machinery B was acquired with a down payment of $6,792 and the remaining payments to be made in 11 annual installments of $7,092 each beginning October 1, 2014. The prevailing interest rate was 8%. The following data were abstracted from present value tables (rounded).

Solution

Answer 1 = $80397 = Land A Allocation in proportion to appraised values at date of exchange: Amount % of Total Land $95,700 10% Building 861,300 90% $957,000 100% Land $803970 x 10% $80,397 Building $803970 x 90% $723,573 $803,970 Answer 2 = $723,573 = Building A Answer 3. estimated Life in years = 47 Years Estimated Life in Years = (723573 - 42100)/14499 = 47 Years Answer 4. $14,499 Same as prior year as, since method is straight line. Answer 5. $135,440 Shares Issued 3400 shares @ $35 119000 Cost of Demolition 16440 Total 135440 Answer 6. None (No Depreciation before use) Answer 7. $48,030 (Fair Value) Answer 8. $7,204.50 $48030 X 15% (1.5 X Straight Line Rate of 10%) Answer 9. $6,123.83 (48030 - 7204.5) X 15% Answer 10. $168200 $184140 (Total Cost) - $15940 (Normal Repairs & Maint.) Answer 11. $35,796 ($168200 - $7120) X 8/36 SYD = (8 X (8+1))/2 = 36 Answer 12. $10,440 ($168200 - $7120) X 7/36 x 4/12. Answer 13. $57422 $6792 + $7092 X 7.139 Answer 14. $2871 $57422 / 20 Years