Asset cost allocation; straight-line depreciation LO2 LO4 In January 2010, ProTech pa...

Asset cost allocation; straight-line depreciation LO2 LO4

In January 2010, ProTech pays $1,350,000 for a tract of land with two buildings. It plans to demolish

Building A and build a new shop in its place. Building B will be a company office; it is appraised at

$482,800, with a useful life of 15 years and a $99,000 salvage value. A lighted parking lot near Building

B has improvements (Land Improvements B) valued at $142,000 that are expected to last another five

years with no salvage value. Without the buildings and improvements, the tract of land is valued at

$795,200. ProTech also incurs the following additional costs.

Required

1. Prepare a table with the following column headings: Land, Building B, Building C, Land Improvements B,

and Land Improvements C. Allocate the costs incurred by ProTech to the appropriate columns and

total each column.

2. Prepare a single journal entry to record all incurred costs assuming they are paid in cash on

January 1, 2010.

3. Using the straight-line method, prepare the December 31 adjusting entries to record depreciation for

the 12 months of 2010 when these assets were in use.

Check (1) Land costs, $1,052,500;

Building B costs, $459,000

(3) Depr.—Land Improv.

B and C, $27,000 and $10,350