Comprehensive Depreciation and Amortization
At December 31, 2007, Martin Company’s noncurrent operating asset and accumulated depreciation and amortization accounts had balances as follows:
|
|
|
Accumulated Depreciation |
|
Category |
Cost of Asset |
and Amortization |
|
Land |
$ 130,000 |
|
|
Buildings |
1,200,000 |
$265,400 |
|
Machinery and equipment |
775,000 |
196,200 |
|
Automobiles and trucks |
132,000 |
86,200 |
|
Leasehold improvements |
221,000 |
110,500 |
|
Category |
Depreciation Method |
Useful Life |
|
Land improvements |
Straight line |
12 years |
|
Buildings |
150% declining balance |
25 years |
|
Machinery and equipment |
Straight line |
10 years |
|
Automobiles and trucks |
150% declining balance |
5 years |
|
Leasehold improvements |
Straight line |
8 years |
Depreciation is computed to the nearest month. The salvage values of the depreciable assets are immaterial.
Transactions during 2008 and other information are as follows:
(a) On January 6, 2008, a plant facility consisting of land and a building was acquired from Atlas Corp. for $600,000. Of this amount, 20% was allocated to land.
(b) On April 6, 2008, new parking lots, streets, and sidewalks at the acquired plant facility were completed at a total cost of $192,000. These expenditures had an estimated useful life of 12 years.
(c) The leasehold improvements were completed on December 31, 2004, and had an estimated useful life of eight years. The related lease, which would have terminated on December 31, 2010, was renewable for an additional 4 year term. On April 29, 2008, Martin exercised the renewal option.
(d) On July 1, 2008, machinery and equipment were purchased at a total invoice cost of $250,000. Additional costs of $10,000 for delivery and $30,000 for installation were incurred.
(e) On August 30, 2008, Martin purchased a new automobile for $15,000.
(f) On September 30, 2008, a truck with a cost of $24,000 and a carrying amount of $8,100 on the date of sale was sold for $11,500. Depreciation for the nine months ended September 30, 2008, was $2,352.
(g) On December 20, 2008, a machine with a cost of $17,000 and a carrying amount of $2,975 at date of disposition was scrapped without cash recovery.
Instructions: Compute total depreciation and amortization expense for the year ended December 31, 2008.