Accounting question - Mitzu & Co | |||||||||
Lump-sum amount paid for all the assets $2,650,000 | |||||||||
Lump sum amount will be allocated to various acquired assets based on Fair Market value | |||||||||
Fair Market value | value of Assets in books | Additional cost incurred | Total Assets value | Salvage value | Useful life | Depreciation | |||
a | b | c | d=b+c | e | f | g=(d-e)/f | |||
Building 1 | - | - | - | - | - | - | Book value NIL | ||
Building 2 | 7,01,500 | 6,09,500 | 6,09,500 | 85,000 | 20 | 26,225 | |||
Land Improvements 1 | 5,18,500 | 4,50,500 | 4,50,500 | - | 17 | 26,500 | |||
Land | 18,30,000 | 15,90,000 | 1,87,400 | 17,77,400 | - | ||||
30,50,000 | 26,50,000 | 1,87,400 | 28,37,400 | 52,725 | |||||
Building 3 | 22,62,000 | 22,62,000 | 4,00,000 | 25 | 74,480 | ||||
Land Improvements 2 | 1,78,000 | 1,78,000 | - | 20 | 8,900 | ||||
- | 24,40,000 | - | 24,40,000 | 83,380 | |||||
50,90,000 | 1,87,400 | 52,77,400 | 1,36,105 | ||||||
Land grading cost is incurred to make the land more useful, hence added to Land cost | |||||||||
Cost of demolishing Building 1 will be treated as Revenue expenses since the Asset value is NIL in the books, having no salvage value | |||||||||
Debit | Credit | ||||||||
Building 2 | Depreciation Expense | 26,225 | Accumulated Depreciation | 26,225 | |||||
Land Improvements 1 | Depreciation Expense | 26,500 | Accumulated Depreciation | 26,500 | |||||
Building 3 | Depreciation Expense | 74,480 | Accumulated Depreciation | 74,480 | |||||
Land Improvements 2 | Depreciation Expense | 8,900 | Accumulated Depreciation | 8,900 | |||||
Total | 1,36,105 | 1,36,105 | |||||||
Journal Entry work sheet | |||||||||
Debit | Credit | ||||||||
31-Dec | Depreciation Expense | 26,225 | |||||||
Accumulated Depreciation | 26,225 | ||||||||
Being Depreciation Expense for Building 2 | |||||||||
Journal Entry | Debit | Credit | |||||||
31-Dec | Depreciation Expense | 74,480 | |||||||
Accumulated Depreciation | 74,480 | ||||||||
Being Depreciation Expense for Building 3 | |||||||||
31-Dec | Depreciation Expense | 26,500 | |||||||
Accumulated Depreciation | 26,500 | ||||||||
Being Depreciation Expense for Land Improvements 1 | |||||||||
31-Dec | Depreciation Expense | 8,900 | |||||||
Accumulated Depreciation | 8,900 | ||||||||
Being Depreciation Expense for Land Improvements 2 | |||||||||
Chapter 8 Problems Saved Problem 8-3A Asset cost allocation; straight-line depreciation LO C1, P1 [The following...
Required information Problem 8-3A Asset cost allocation; straight-line depreciation LO C1, P1 (The following information applies to the questions displayed below.] In January 2018, Mitzu Co. pays $2,600,000 for a tract of land with two buildings on it. It plans to demolish Building 1 and build a new store in its place. Building 2 will be a company office; it is appraised at $720,000, with a useful life of 20 years and a $75,000 salvage value. A lighted parking lot...
Required information Problem 8-3A Asset cost allocation; straight-line depreciation LO C1, P1 (The following information applies to the questions displayed below.) In January 2018, Mitzu Co. pays $2,750,000 for a tract of land with two buildings on it. It plans to demolish Building 1 and build a new store in its place. Building 2 will be a company office; it is appraised at $750,000, with a useful life of 20 years and a $85,000 salvage value. A lighted parking lot...
Required information Problem 8-3A Asset cost allocation; straight-line depreciation LO C1, P1 (The following information applies to the questions displayed below.] In January 2018, Mitzu Co. pays $2,600,000 for a tract of land with two buildings on it. It plans to demolish Building 1 and build a new store in its place. Building 2 will be a company office; it is appraised at $720,000, with a useful life of 20 years and a $75,000 salvage value. A lighted parking lot...
Chapter 8 Problems i Saved Required information Problem 8-3A Asset cost allocation; straight-line depreciation LO C1, P1 [The following information applies to the questions displayed below.) Part 2 of 3 On January 1, Mitzu Co. pays a lump-sum amount of $2,650,000 for land, Building 1, Building 2, and Land Improvements 1. Building 1 has no value and will be demolished. Building 2 will be an office and is appraised at $701,500, with a useful life of 20 years and a...
t Chapter 10 Saved Help Required information (The following information applies to the questions displayed below.) On January 1, Mitzu Co. pays a lump sum amount of $2,600,000 for land, Building 1, Building 2, and Land Improvements 1. Building 1 has no value and will be demolished. Building 2 will be an office and is appraised at $737,500, with a useful life ars and a $75,000 salvage value. Land Improvements 1 is valued at $413,000 and is expected to last...
Required information [The following information applies to the questions displayed below.] On January 1, Mitzu Co. pays a lump-sum amount of $2,750,000 for land, Building 1, Building 2, and Land Improvements 1. Building 1 has no value and will be demolished. Building 2 will be an office and is appraised at $678,500, with a useful life of 20 years and a $75,000 salvage value. Land Improvements 1 is valued at $472,000 and is expected to last another 16 years with...
Requirea information [The following information applies to the questions displayed below.) On January 1, Mitzu Co. pays a lump-sum amount of $2.800,000 for land, Building 1. Building 2 and Land Improvements 1. Building 1 has no value and will be demolished. Building 2 will be an office and is appraised at $737,500, with a useful life of 20 years and a $85,000 salvage value. Land Improvements 1 is valued at $501,500 and is expected to last another 17 years with...
On January 1, Mitzu Co. pays a lump-sum amount of $2,700,000 for land, Building 1, Building 2, and Land Improvements 1. Building 1 has no value and will be demolished. Building 2 will be an office and is appraised at $708,000, with a useful life of 20 years and a $80,000 salvage value. Land Improvements 1 is valued at $413,000 and is expected to last another 14 years with no salvage value. The land is valued at $1,829,000. The company...
Required information (The following information applies to the questions displayed below.] On January 1, Mitzu Co. pays a lump-sum amount of $2,750,000 for land, Building 1, Building 2, and Land Improvements 1. Building 1 has no value and will be demolished. Building 2 will be an office and is appraised at $678,500, with a useful life of 20 years and a $75,000 salvage value. Land Improvements 1 is valued at $472,000 and is expected to last another 16 years with...
Problem 8-6A Disposal of plant assets LO C1, P1, P2 [The following information applies to the questions displayed below.] Onslow Co. purchases a used machine for $192,000 cash on January 2 and readies it for use the next day at a $8,000 cost. On January 3, it is installed on a required operating platform costing $1,600, and it is further readied for operations. The company predicts the machine will be used for six years and have a $23,040 salvage value....