Question

The following information is provided for LAX, LLC for 2021: Vehicles 5,000 Salvage value Life in years Life in units Basket assets Land Land improv. Office building Factory Equipment Vehicles Total basket value: Equipment 35,000 7 900,000 Appraisal $ $ 720,000 54,000 1,710,000 720,000 360,000 36,000 $ 3,600,000 100,000 Salvage value Life in years Life in miles Units in 2021 131,853 Miles in 2021 24,608 Cash paid for basket: $ 3,500,000 1. Prepare the allocation table for the basket purchase: Allocation Land Land improv. Office building Factory Equipment Vehicles Appraisal $ $ 720,000 54,000 1,710,000 720,000 360,000 36,000 $ 3,600,000 Percent of total 20.00% 1.50% 47.50% 20.00% 10.00% 1.00% 100.00% Cash paid $ 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 2. Make the journal entry to post the assets: Accounts Debits Credits Date 2021/1/1 3. Calculate the annual depreciation expense for the equipment and vehicles: Equipment Vehicles Straight-line Activity-based Difference: 4. Prepare the straight-line depreciation table for the equipment: Annual depreciation Year Equipment Accumulated depreciation Book value VOU AWN=0 5. If LAX sold the equipment at the end of year 4 for $165,500, prepare the journal entry: Accounts Debits _ Credits Date 2024/12/31

Answer 1

Solution As per Below Images:

1) Allocation Table for Basket Purchase Amount in $ Appraisal 720000 Cash Paid Percentage of Total Allocation Land 700000 20% 3500000 Land Improve Office Building Factory Equipment Vehicles 54000 1.50% 3500000 52500 47.50% 1662500 1710000 3500000 720000 3500000 700000 20% 3500000 360000 10% 350000 3500000 36000 35000 100% 3500000 3600000 2) Journal Entry to post assets Debit Amount in $ Credit Amount in $ Particulars Land 700000 Land Improve Office Building Factory Equipment Vehicles 52500 1662500 700000 350000 35000 3500000 To Cash Account (Being Basket of Assets Purchased) 3) Calculation for Annual Depreciation Expense for the equipment and Vehicles Amount in $ Equipment Vehicles Straight Line Depreciation Activity Based Depreciation 45000 6000 46148.55 7382.40 Difference 1148,55 1382.4 Working for Straight Line Depreciation Straight Line Depreciation Cost of asset - Salvage Value %3D Useful Life Equipment Depreciation= 350000-35000 $45,000 Vehicle Depreciation= 35000-5000 $6,000 Working for Activity Based Depreciation Cost of asset - Salvage Value Activity Based Depreciation x Units in Year Life in Units Equipment Depreciation= 350000-35000 x 131853 Units 900000 Units $46,148.55 Vehicle Depreciation= 35000-5000 x 24608 Miles 100000 Miles $7,382.40

4) Straight Line Depreciation Table for the Equipment Amount In $ Accumulated Book Year Equipment Annual Depreciation Value Depreciation 350000 350000 45000 45000 305000 350000 350000 260000 45000 90000 350000 45000 135000 215000 350000 45000 180000 170000 350000 45000 225000 125000 45000 350000 270000 80000 350000 35000 45000 315000 5) Journal Entry if Equipment sold at the End of Year 4 Debit Amount in $ Particulars Credit Amount in $ Date 2024/12/31 Cash Account 165000 Loss on Sale of Equipment 5000 To Equipment Account 170000 (Being Equipment Sold)