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In 1993, Herman Moore Company completed the construction of a building at a cost of $2,000,000 and first occupied it in January 1994. It was estimated that the building will have a useful life of 40 years and a salvage value of$60,000 at the end of that time.

Early in 2004, an addition to the building was constructed at a cost of $500,000. At that time, it was estimated that the remaining life of the building would be, as originally estimated, an additional 30 years. and that the addition would have a life of 30 years and a salvage value of$20,000.

In 2022, it is determined that the probable life of the building and addition will extend to the end of 2053, or 20 years beyond the original estimate.

Instructions

a. Using the straight-line method, compute the annual depreciation that would have been charged from 1994 through 2003.

b. Compute the annual depreciation that would have been charged from 2004 through 2021.

c. Prepare the entry, if necessary, to adjust the account balances because of the revision of the estimated life in 2022,

d. Compute the annual depreciation to be charged, beginning with 2022.

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Amy Tanner purchased renter's insurance with the following coverage: $100,000 liability for lawsuits and medical;$20,000 replacement cost for personal property, $500 deductible. One night, Amy left a candle burning that ended up causing a fire and destroying all of her personal belongings. The original cost of the belongings was$32,000.

1. How much did the insurance company pay for this claim?

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Crystal Lake Inc. bottles and distributes spring water. On March 4 of the current year, Crystal Lake reacquired 33,000 shares of its common stock at $84 per share. On August 27, Crystal Lake Inc. sold 25,000 of the reacquired shares at$90 per share. The remaining 8,000 shares were sold at $80 per share on November 11.

b. Compute the balance in Paid-In Capital from Sale of Treasury Stock on December 31 of the current year.

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Burns Company’s 2019 and 2018 balance sheets presented the following data for equipment:

$$\begin{array}{lrr} &\textbf{12/31/2019}&\textbf{12/31/2018}\\\hline \text{Equipment}&\$325,000&\$262,000\\ \text{Accumulated depreciation}&\underline{~~133,900}&\underline{~~108,000}\\\ \text{Book value}&\underline{\underline{\$191,100}}&\underline{\underline{\$154,000}} \end{array}$$

During 2019, equipment costing $41,000 with accumulated depreciation of$36,700 was sold for cash, producing a $3,200 gain.

Required:

Calculate the amount that should be included as a cash inflow from the disposal of equipment.

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