Question

Problem 10-1A Plant asset costs, depreclatlon methods LO c1, P1 Timberly Construction negotiates a lump-sum purchase of several assets from a company that is going out of business. The purchase is completed on January 1.2017, at a total cash price of $820.000 for a building, land, land improvements, and four vehicles. The estimated market values of the assets are building. $465,500: land, $275,500: land improvements, $47,500, and four vehicles $161,500. The company's fiscal year ends on December 31 Required: 1-o. Prepare a table to allocate the lump-sum purchase price to the separate assets purchased. 1-b. Prepare the journal entry to record the purchase. 2. Compute the depreciation expense for year 2017 on the building using the straight-line method, assuming a 15-year ife and a $30,000 salvage value. pute the depreciation expense for year 2017 on the land improvements assuming a five-year life and double-declining-balance depreciation Complete this question by entering your answers in the tabs below. Required 1A Required 18 Required 2 Required 3 Prepare a table to allocate the lump-sum purchase price to the separate assets purchased. Allacation of total Appraised Percent of Total Total cost of Apportioned Value Appraised Vale Acquisition Cost cost

prepare journal entry to record purchase,
depreciation expense on building,
depreciation expense on land improvements

Answer 1

solution 1) Allocation of total cost Appraised Value Percent of Total Appraised Value X Total Cost of AcquisitionApportioned Cost 401800 237800 41000 9400 820000 49%) 29% Buildi Land Land Improvements Vehicle Totals 465500 275500 47,500 161.500 950000 820,000 820,000 820,000 820, 000 5%X 17%! 100% Date Jan-01 Debit General Journal Buildi Land Land Improvements Vehicle Cash Credit 401,800 237,800 41,000 139,400 820,000 3) Depreciation expense on building (401800-30000)/15 24,787 4) SLM Depreciation rate-1/5 DDB depreciation rate-20%*2 Depreciation expense on building (41000*40%) 20.00% 40.00% 16,400