A-1

On 1 January, Year 1, Poultry Processing Company purchased a freezer and related installation equipment for $71,700. The kit had a three-year estimated life with a $4,500 salvage value. Straight-line depreciation was used. At the beginning of Year 3, Poultry Processing revised the asset's expected life to four years rather than three years. The salvage value was changed to $3,500. Required Compute the depreciation expense for the four years, Year 1Year 4.

A-2

Bills Wrecker Service has just completed a minor repair on a tow truck. The repair cost was $950, and the book value prior to the repair was $4,900. In addition, the company spent $9,000 to replace the roof of a building. The new top extended the life of the building by five years. Prior to the roof replacement, the general ledger reflected the Building account at $89,700 and the related Accumulated Depreciation account at $36,900. Required After the work was completed, what book value should appear on the tow truck and building balance sheet?

A-3

Mitre Company acquired Midwest Transportation Company for $1,375,950. The fair market values of the assets acquired were as follows. No liabilities were assumed.

Equipment	$ 317,100
Land	193,050
Building	647,900
Franchise (10-year life)	95,000

Required a. Calculate the amount of goodwill acquired. b. Prepare the journal entry to record the amortization of the franchise fee at the end of year 1.