Facts: The Jacobson Family Farm is located down the road from Green Acres Sod Company. When Dale Jacobson passed away the farm went up for auction and at $800,000 Green Acres made the winning bid! After paying the auctioneer commission and all closing fees the sod company was in for a total purchase price of $828,200 (which is still a good deal when compared to the $1,025,000 appraised value publicized by the auction house prior to the sale).

The farm purchase was finalized March 1, 2018 and included the following 4 distinct assets: 80 acres of land, the Jacobsons 4-bedroom historic farmhouse, various pieces of equipment and some old run-down barns scattered throughout the 80 acres. The auction house provided the following individual appraised values for each asset:

It is Green Acres intention to use the farmhouse as office space and the 80 acres to grow sod. During March 2018, Green Acres incurred $71,200 of additional cost as shown below:

Also, in March, Green Acres purchased a new irrigation system. The system was listed in the vendors catalog at a selling price of $115,000 but Green Acres was able to negotiate a 10% trade discount and payment terms of 1/5, n/30. The system was ordered March 8 and shipped FOB shipping point on March 18 with $2,500 of freight prepaid. The system was delivered March 19. Green Acres paid the balance due to the vendor on March 21 and then spent an additional $2,000 in labor to install the system and another $1,000 in labor to test it.

Finally, in October 2018, when harvest was over, Green Acres spent $1,200 winterizing the equipment and $800 winterizing the irrigation system. Winterizing is a common practice and while it doesnt improve the assets it does insure they maintain their condition during the colder months such that they are ready to be used in spring.

Requirements: Show all work! Consider all facts from page 1 when answering these questions.

Assume Green Acres started using the farm & irrigation system for official business on April 1, 2018.

1. Prepare the long-lived asset section for the companys April 1, 2018 balance sheet.

2. Record the companys depreciation for 2018 assuming Green Acres uses the straight-line depreciation method and utilizes a 10% residual value for all depreciable assets. Additionally, the company assumes an estimated useful life of 18 years for all depreciable assets except equipment which is 8 years.

3. Prepare the long-lived asset section for the companys 12/31/2018 balance sheet.

4. Explain any expenditure from the facts that has not already been reflected in your above answers. Prepare the entry to record the item(s) not included above.

Bid for Property Auctioneer Commission Total Auction Price $800,000 20,000 $820,000 Attorney Fees & Closing Cost 8,200 Total Purchase Price $828,200 80 acres 4 bedroom Farmhouse Equipment Barns $660,000 315,000 50,000 0 $1,025,000 $8,000 12,000 (1,800) 18,000 35,000 $71,200 to repair and recondition the used farm equipment for damage that already existed at the time of the auction. to demolish and remove the old barns*. Green Acres was able to sell 225 planks of barnwood salvaged from the demolition at $8 per plank. to re-grade the land & remove tree stumps making it suitable for planting sod remodeling for office space in farmhouse