Dispositions, Including Condemnation, and Demolition) Presented below is a schedule of property dispositions for Frank Thomas Co.

Dispositions, Including Condemnation, and Demolition) Presented below is a schedule of property dispositions for Frank Thomas Co.

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u06a2 Depreciating Plant Assets
After reading the information on accounting for inventories in Chapter 10, 
complete Problem P10-10 on page 545. This problem focuses on the 
journal entries required for the acquisition of plant assets as well as 
calculating depreciation expenses for each asset type.
Use the attached template in the assignment area. Where appropriate, 
show all calculations leading to the final solution.
P10-10
(Dispositions, Including Condemnation, and Demolition)
Presented below is a
schedule of property dispositions for Frank Thomas Co.
The following additional information is available.
Land
On February 15, a condemnation award was received as consideration for unimproved land
held primarily as an investment, and on March 31, another parcel of unimproved land to be
held as an investment was purchased at a cost of $35,000.
Building
On April 2, land and building were purchased at a total cost of $75,000, of which 20% was
allocated to the building on the corporate books. The real estate was acquired with the
intention of demolishing the building, and this was accomplished during the month of
November. Cash proceeds received in November represent the net proceeds from
demolition of the building.
Warehouse

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On June 30, the warehouse was destroyed by fire. The warehouse was purchased January 2,
1995, and had depreciated $11,000. On December 27, the insurance proceeds and other
funds were used to purchase a replacement warehouse at a cost of $90,000.
Furniture
On August 15, furniture was contributed to a qualified charitable organization. No other
contributions were made or pledged during the year.
Automobile
On November 3, the automobile was sold to Ozzie Guillen, a stockholder.
(
LO 8
)
Instructions
Indicate how these items would be reported on the income statement of Frank Thomas Co.
(Warfield 544-545)
Warfield, Terry D.
.
Intermediate Accounting: Principles and Analysis, 2nd Edition
. John Wiley
& Sons, 11/2007. .

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u06a2 Depreciation Plant Assets
davis
Dr.
Cr.
Land
Old land
Cash
Land
Gain or Loss on dispositon
New Land
Land
Cash
Building
Cash
Building
Gain or Loss on dispositon
Warehouse
Cash
Accum Depr Warehouse
Warehouse
Involuntary conversion
New warehouse
Warehouse
Cash
Furniture
Donation
Accun Depr Furniture
Furniture
Automobile
Cash
Accum Depr Automobile
Automobile
Gain or Loss on disposition

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