Lobo Corporation balance sheet at December 31, 2011, had the following balances.
Land $ 300,000
Land improvements 140,000
Buildings 1,100,000
Equipment 960,000
During 2012, the following transactions occurred.
1. A tract of land was acquired for $150,000 as a potential future building site.
2. A plant facility consisting of land and building was acquired from Mendota Company in exchange
for 20,000 shares of Lobo%u2019s common stock. On the acquisition date, Lobo%u2019s stock had a closing market
price of $37 per share on a national stock exchange. The plant facility was carried on Mendota%u2019s
books at $110,000 for land and $320,000 for the building at the exchange date. Current appraised
values for the land and building, respectively, are $230,000 and $690,000.
3. Items of machinery and equipment were purchased at a total cost of $400,000. Additional costs were
incurred as follows.
Freight and unloading $13,000
Sales taxes 20,000
Installation 26,000
4. Expenditures totaling $95,000 were made for new parking lots, streets, and sidewalks at the corporation's various plant locations. These expenditures had an estimated useful life of 15 years.
5. A machine costing $80,000 on January 1, 2004, was scrapped on June 30, 2012. Double-declining balance depreciation has been recorded on the basis of a 10-year life.
6. A machine was sold for $20,000 on July 1, 2012. Original cost of the machine was $44,000 on January 1, 2009, and it was depreciated on the straight-line basis over an estimated useful life of 7 years and a salvage value of $2,000.
Required:
(a) Prepare a detailed analysis of the changes in each of the following balance sheet accounts for 2012.
Land
Land improvements
Buildings
Equipment
(Hint: Disregard the related accumulated depreciation accounts.)
(b) List the items in the fact situation that were not used to determine the answer to (a), showing the pertinent amounts and supporting computations in good form for each item. In addition, indicate where, or if, these items should be included in Lobo financial statements.