Page 1 ACC 2101 - Extra credit problem Page 4 Specific transactions during 20x2: WE bo bo 1) On May 1, 20x2, the HCC purchased a vacant building which had been used for a short period of time as a dance studio and small performance space. Cost allocation: Total cost: $ 560,000 Land percentage Building 18% 65% Heating/Air conditioning equipment 12% Old theater equipment 5% Terms of purchase: A cash down payment was paid on May 1, 20x2: A 30-year, 5% mortgage was arranged for the remaining amount: 84,000 $ 476,000 DEPRECIATION was determined as follows: BUILDING: Estimated life (in number of years ) 35 (Note: Depreciation will begin as of July 1, 20x2 - after renovation.) The residual value (as a percentage of original cost) is estimated at: 20% HEATING AND Estimated life (in number of years - Depreciation to begin 5/1/x2 ) in A/C EQUIPMENT: The residual value (as a percentage of original cost) is estimated at: 0% OLD THEATER The old theater equipment is going to be sold and replaced and is, therefore, EQUIPMENT: not being depreciated. 2) A two-year fire insurance policy was purchased on May 1, 20x2 for: 9,840 ovation of the building began immediately after the purchase date. The renovation took two complete and the building was ready for use as of July 1, 20x2. [The renovation cost will building. The depreciation on the building will begin on