Question

P, 2A In its first year ofbusiness, Chal Board purchased land, abuilding, and equipment on Mchs 2016. for $650,000 in total. The land was valued at $275,000, the building at $343,750, and the equipment at Additional information on the depreciable assets follows: l depreciation and on which assets $68,750. partial period depreciation. (LO 1, 2) AP Asset Residual Value Useful Life in Years Depreciation Miethod Building Equipment $25,000 60 Straight-line Double diminishing-balance 5,000 Instructions a) Allocate the purchase cost of the land, building, and equipment to each of the assets. b) ChalkBoard has a December 31 fiscal year end and is trying to decide how to calculate depreciation for assets purchased during the year. Calculate depreciation expense for the building and equipment for 2016 and 2017 assuming 1. depreciation is calculated to the nearest month. year's depreciation is recorded in the year of acquisition. in the year of acqulsition: recording depreciation to the nearest ch policy should month or recording a half year of depreciation? id Which NO IT EURTHER In the yearthe asset s purchased,should Chalk Bound record depreciation forthe exsct of days the asset is owned? Why or why not humber of

Answer 1

ALLOCATION OF PURCHASE COST of land , Bl eipments 1醬 a (a게 In the-given-atubon land, Pusehard cholebah, bo, Hare tetel val os lad Buldrg aud pouel acconding to ther maetvelee Finotal value- land in Marlat nalu, 618t,S00o # 68 。 n the ome way, value o Brilds ラ 事687, seo 印Neu, walu..b €2u.pmanr AJ0o 6$1.sto

Date Page No. Aktir Calc the value o Cost hate-for landi-Building and一一 For Land toom the above Calulnbien we cenlule ー# 2601000 for Buildin for eupment The tota equipment e Purinar Ll
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ate/ Page No. Bvu di Calculathon Rolf & 오017 eest 8.-Budding--=-4 Residual uaha E g2.500 ο 25 000 , ciation lut 92S,000 . # 2s, ooo 10 60 dep 12- 60 taltutaHon η d.ruaNon try enuyrrvre-frv 4ua. e 2016 4207 12. S:/, .. X. 150.___ MLe amuthod deB_马2013
b). 2. Half year's depreciation is recorded in the year of acquisitions

So total depreciation recoded for building is

$ 325,000 - $25,000 / 60 * 6/12 = $ 2,500

And depreciation for equipment will be

$ 65,000 - $ 5,000 * 25% * 6/12= $ 7,500

c). Double diminishing bal method of depreciation should be the best method to use because balance is diminishes over the life of asset. As life of asset increases depreciation expenses will decreases.so doulbe diminishing balance method is appropriate.