Question
A 300,000-square-foot building was acquired for $3,600,000. The values determined for each of the components acquired were: Components Values Estimated life Land $1,000,000 No estimate
A 300,000-square-foot building was acquired for $3,600,000. The values determined for each of the components acquired were:
Components | Values | Estimated life |
Land | $1,000,000 | No estimate |
Building, if vacant | 2,000,000 | 40 years |
Tennant relationships | 250,000 | No estimate |
In-place leases | 350,000 | 6 years |
Above-market leases | 180,000 | 4 years |
Below-market leases | (90,000) | 8 Years |
TOTAL | $3,690,000 |
Required:
1. Prepare a table showing the allocation of the purchase price to the individual assets acquired.
2. Show the journal entry (oer entries) that the purchaser would record to journalize the purchase (please use proper journal entry formatting).
3. Show the journal entry (or entries) that the purchaser would record to journalize all the depreciation/amortization to be taken for the first year of ownership of the building, assuming the purchase took place on January 1 and the purchaser prepares financial statements annually on December 31. (assume no prior adjusting entries were made with regards to depreciation/amortization and use proper journal entry formatting).
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