Question
On March 31, 2024, Susquehanna Insurance purchased an office building for $13,500,000. Based on their relative fair values, one-third of the purchase price was allocated
On March 31, 2024, Susquehanna Insurance purchased an office building for $13,500,000. Based on their relative fair values, one-third of the purchase price was allocated to the land and two-thirds to the building. Furniture and fixtures were purchased separately from office equipment on the same date for $1,250,000 and $750,000, respectively. The company uses the straight-line method to depreciate its buildings and the double-declining-balance method to depreciate all other depreciable assets. The estimated useful lives and residual values of these assets are as follows:
| Service Life | Residual Value | ||
|---|---|---|---|
| Building | 30 | 5% OF COST | |
| Furniture and fixtures | 20 | 5% OF COST | |
| Office equipment | 10 | $ 35,000 | |
Required:
A. Calculate depreciation for the years ended December 31, 2024 and 2025. Note: Do not round intermediate calculations.
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B. What book values would be reported in the December 31, 2025, balance sheet (including land)?
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The Operational Auditing Handbook Auditing Business And IT Processes
Authors: Andrew Chambers, Graham Rand
2nd Edition
0470744766, 978-0470744765
