Question
During the first few days of the year, Coast Company entered into the following transactions: 1. Purchased a parcel of land with a building on
During the first few days of the year, Coast Company entered into the following transactions: 1. Purchased a parcel of land with a building on it for $900,000 cash on January 1 (Dec 31 fiscal year end company). The building, which will be used in operations, has an estimated useful life of 25 years and a salvage value of $60,000. Of the purchase price, $810,000 is allocated to the cost of the building, and the remaining balance to the land. On January 1, a new building entrance was constructed for $25,000. a. Determine the acquisition cost associated with land, building, and depreciation expense for the building in the first year. b. Calculate the depreciation expense for the year using straight-line depreciation for the building.
2. Paid $30,000 for the construction of an asphalt parking lot for customers that was completed and put into operation on July 1 (Dec 31 fiscal year end company). The parking lot is expected to last 12 years and has no salvage value. Calculate the depreciation expense for the first year using straight-line depreciation for the building.
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