Chapter 7 Homework - Fall 2021 Acquisition of An Asset: Moss Piano Company purchases a tract of land and an existing building for $1,000,000. The company plans to remove the old building and construct a new building on the site. In addition to the purchase price, Moss pays closing costs, including title insurance of $3,000 The company also pays $14,000 in property taxes, which includes $9,000 of back taxes (unpaid taxes from previous years) paid by Moss on behalf of the seller and $5,000 due for the current fiscal year after the purchase date. Shortly after closing the company pays a contractor $50,000 to tear down the old building and remove it from the site. Moss is able to sell salvaged materials from the old building for $5,000 and pays an additional $11,000 to level the land, Determine the cost of the land. Item Amount Total Depreciation and Disposal The Moss Piano Company purchased a Delivery Truck on January 1, 2025 for $50,000 cash which included all costs to get the asset ready for use. The truck has an anticipated life of 100,000 miles or 4 years. The estimated residual value at the end of the assets service life is expected to be $2,000. For assets of this type, the company utilizes the straight-line depreciation method. A) Record the purchase of the asset Account SE NI CF DR CR B) Complete the depreciation table below. Period Ended Depreciation Expense Accumulated Depreciation End of Period Book Value December 31, 2025 December 31, 2026 December 31, 2027 December 31, 2028 C) Record the entry for December 31, 2025 to record the depreciation for the year. L SE R NI CF A E Account DR CR D) Suppose the company sells the van on December 31, 2027 for $18,000 cash. Provide the journal entry to record the sale. L SE R E NI CF Account DR CR E) Assume the company chooses to use the units-of-production method. Based on the information below, complete the depreciation schedule. Year 2025 2026 2027 2028 Miles Driven 27,000 24,000 32,000 22,000 Period Ended Depreciation Expense Accumulated Depreciation End of Period Book Value December 31, 2025 December 31, 2026 December 31, 2027 December 31, 2028