(Recording plant asset transactions; reporting on the balance sheet) Ambold Lock & Key, Inc. has a hefty investment in security equipment, as reported in the company’s balance sheet at December 31, 20X5:
|
Property, plant, and equipment, at cost: |
|
|
Land |
$ 200,000 |
|
Buildings |
310,000 |
|
Less: Accumulated depreciation |
(40,000) |
|
Security equipment |
620,000 |
|
Less: Accumulated depreciation |
(370,000) |
In early July 20X6, Ambold purchased additional security equipment at a cost of $80,000. Ambold depreciates buildings by the straight line method over 20 years with residual value of $70,000. Due to obsolescence, security equipment has a useful life of only 8 years and is being depreciated by the double declining balance method with zero residual value.
Required
1. Journalize Ambold’s plant asset purchase and depreciation transactions for 20X6.
2. Report plant assets on the company’s December 31, 20X6, balance sheet.