The plant asset and accumulated depreciation accounts of Jackson

The plant asset and accumulated depreciation accounts of Jackson Corporation had the following balances at December 31, 2015:

Plant Asset Accumulated Depreciation

Land $ 375,000   $ 0

Land improvements   187,500     50,000

Building   1,550,000     375,000

Machinery and equipment   1,208,000     430,000

Automobiles   155,000     114,500

Transactions during 2016 were as follows:

a. On January 2, 2016, machinery and equipment were purchased at a total invoice cost of $285,000, which included a $6,000 charge for freight. Installation costs of $32,000 were incurred.

b. On March 31, 2016, a machine purchased for $63,000 in 2012 was sold for $39,000. Depreciation recorded through the date of sale totaled $26,775.

c. On May 1, 2016, expenditures of $55,000 were made to repave parking lots at Jackson’s plant location. The work was necessitated by damage caused by severe winter weather.

d. On November 1, 2016, Jackson acquired a tract of land with an existing building in exchange for 10,000 shares of Jackson’s common stock that had a market price of $43 per share. Jackson paid legal fees and title insurance totaling $25,500. Shortly after acquisition, the building was razed at a cost of $40,000 in anticipation of new building construction in 2017.

e. On December 31, 2016, Jackson purchased a new automobile for $16,500 cash and trade-in of an old automobile purchased for $20,500 in 2012. Depreciation on the old automobile recorded through December 31, 2016, totaled $15,375. The fair value of the old automobile was $4,000.

Required: For each asset classification, create a schedule showing depreciation for the year ended December 31, 2016, using the following depreciation methods and useful lives:

Land improvements—Straight line; 15 years.

Building—150% declining balance; 20 years.

Machinery and equipment—Straight line; 10 years.

Automobiles—150% declining balance; 3 years.

Jackson Corporation

Depreciation Expense

For the year Ended December 31, 2016

Land Improvements:


Machinery and Equipment:


Total depreciation expense for 2016:

Here’s the SOLUTION

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