Question

Required information [The following information applies to the questions displayed below.) Timberly Construction makes a lump-sum purchase of several assets on January 1 at a total cash price of $850,000. The estimated market values of the purchased assets are building, $448,500; land, $273,000; land improvements, $78,000; and four vehicles, $175,500. Required: 1-a. Allocate the lump-sum purchase price to the separate assets purchased. 1-b. Prepare the journal entry to record the purchase. 2. Compute the first-year depreciation expense on the building using the straight-line method, assuming a 15-year life and a $30,000 salvage value. 3. Compute the first-year depreciation expense on the land improvements assuming a five-year life and double-declining-balance depreciation.

Answer 1

norll? Answer Building Da) prepare a table to allocate the lumpsum purchase price to the separate assets purchased ogone particulars do Amtin) (8 50,000 448.500) 391,000 land 18.50 700 x 273,000) 23.,000 , na mit (850,000 x 18.009) 68,000 land Fyprovement (975000 X 78,009) 68,000 vehicles 850,000 49975000i Cabo 1975,000 1975,000 , - X 175,500) 153000 Totat TO Total bung 850,000

:b) Joional Entry Rate Account & toplanation Journal Entry Date Account Explanation Debit Credit debit credit 27,200 27,200 Building A391000 Land 238000 Land Improvements ) 68000 ball do Fows vehicles 153000"; cash h : 850,000 to record purchase) i Depreciation Trekende Accumulated depreciation on Land improvement (2x 68000) - 5 F. Note: double-declining balance methood . sep: 2 x cost de Allet a useful life of an asset 2. eate Journal Eriting Account & Explanation - (2468000) = 27200 Debit credit Depreciation Exckenise 24067. 24,067 Accumulated depreciation Building 3.91000-30,000 15 (To Record depreciation)

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