Question

The following Information applies to the questions displayed below.] Rodriquez Company pays $365,000 for real estate plus $19,345 in closing costs. The real estate consists of land appraised ot $204,000: land improvements appraised at $71,400; and a building appraised at $234,600. 2. value: 100 points Allocate the total cost among the three purchased assets. (Round your "Apportioned Cost" answers to 2 decimal places.) Percent of Total Apportioned Cost x Total Cost of Acquisition Appraised Value Appraised Value x 384345 204,000 Land Land improvements 71,400 14% x 384345 234,600 x 384345 Building 0.00 510,000 14% Totals

Answer 1

Answer

Allocation of Total Cost	Appriased Value	% of total appraised value	Total cost of acquisition	Apportioned Cost
Land	$                           204,000.00	40.0%	$                   384,345.00	$                                      153,738.00
Land Improvement	$                             71,400.00	14.0%	$                   384,345.00	$                                        53,808.30
Building	$                           234,600.00	46.0%	$                   384,345.00	$                                      176,798.70
Total	$                           510,000.00	100%		$                                      384,345.00

Date	Accounts title	Debit	Credit
Jan-01	Land	$             153,738.00
	Land Improvement	$               53,808.30
	Building	$             176,798.70
	Cash		$                   384,345.00
	(lumpsum purchases recorded)

• Working

A	Cost	$    60,200.00
B	Residual Value	$      8,500.00
C=A - B	Depreciable base	$    51,700.00
D	Life [in years]	10
E=C/D	Annual SLM depreciation	$      5,170.00
F=E/C	SLM Rate	10.00%
G=F x 2	DDB Rate	20.00%

Straight Line Depreciation
Choose Numerator	Choose Denominator	Annual Depreciation expense
Cost minus Salvage	Estimated useful life [years]	Depreciation expense
$       51,700.00	10	$         5,170.00
Year 2 Depreciation	$              5,170.00
Year end book value	$ 49,860.00

Units of Production Depreciation:
Choose numerator	Choose Denominator	Annual Depreciation Expense
(Cost - Salvage) / Total units of production	Expected units	Depreciation expense per unit
$       54,000.00	450000 units	$                 0.12
Annual Production	Depreciation Expense
Year 2: 49000 units	$ 5,880.00