Logic Co. recently negotiated a lump-sum purchase of several assets from a company that was going out of business. The purchase was completed on March 1, 2020, at a total cash price of $1,260,000 and included a building, land, certain land improvements, and 12 vehicles. The estimated market values of the assets were building, $652,800; land, $462,400; land improvements, $68,000; and vehicles, $176,800. The company’s fiscal year ends on December 31.

Required

1. Prepare a schedule to allocate the lump-sum purchase price to the separate assets that were purchased. Also present the journal entry to record the purchase.

2. Calculate the 2020 depreciation expense on the building using the straight-line method to the nearest whole month, assuming a 15-year life and a $41,040 residual value.

3. Calculate the 2020 depreciation expense on the land improvements assuming a five-year life, $12,000 residual, and double-declining-balance depreciation calculated to the nearest whole month.

Analysis Component: Assume the assets purchased on March 1, 2020, were not put into service until May 23, 2020. Would this affect your answers in parts 2 and 3 above? Explain.