2. United Alliance Inc. paid $1,000,000 to purchase land and equipment as a package at the beginning of 2018. If the land and equipment are sold separately, land would be priced at 650,000 and equipment would be priced at $450,000. United Alliance estimated the useful life of the equipment to be 5 years with the salvage value of $50,000 or 800,000 units. The equipment produced 50,000 units in 2018. (30 marks)

Required:

a.Determine the purchase price for the land and the equipment and prepare the journal entry for the purchases.

b.Calculate depreciation expense for 2018 under each of the following methods for the equipment:

i.straight-line

ii.units-of-production

iii.double-declining-balance