In early 1990, Nobles Company paid ($ 975,000) for real estate that included a tract of land
Question:
In early 1990, Nobles Company paid \(\$ 975,000\) for real estate that included a tract of land on which two buildings were located. The plan was to demolish Building A and build a new store in its place. Building B was to be used as a company office and was appraised to have a value of \(\$ 315,000\), with a useful life of 20 years and a \(\$ 45,000\) salvage value. A lighted parking lot near Building B had improvements valued at \(\$ 105,000\) that were expected to last another five years and have no salvage value. In its existing condition, the tract of land was estimated to have a value of \(\$ 630,000\).
Nobles Company incurred the following additional costs:
\section*{Required}
1. Prepare a form having the following column headings: Land, Building \(\mathrm{B}\), Building C, Land Improvements B, and Land Improvements C. Allocate the costs incurred by Nobles Company to the appropriate columns and total each column.
2. Prepare a single journal entry dated June 1 to record all of the costs incurred, assuming they were all paid in cash.
3. Prepare December 31 adjusting entries to record depreciation for the seven months of 1990 during which the assets were in use. Use sum-of-the-years'digits depreciation for the newly constructed Building \(\mathrm{C}\) and Land Improvements \(\mathrm{C}\) and straight-line depreciation for Building B and Land Improvements B.
Problem 9-6A Plant asset costs and depreciation, including MACRS (L.O. 1, 2, 3)
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