Pharoah Farms purchased real estate for $$1,170,000,$ which included $$4,100$ in legal fees. It paid $$244,000$ cash and incurred a

mortgage payable for the balance. The real estate included land that was appraised at $$477,400,$ a building appraised at $$750,200,$

and fences and other land imprevements appraised at $$136,400.$ The building has an estimated useful life of $60$ years and a $$51,000$

residual value. Land improvements have an estimated $15-$year useful life and no residual value.

$($a$)$

Your answer is correct.

Calculate the cost that should be allacated to each asset purchased.

Land

Building

Land Improvements

$

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Solution

List of Accounts

$($b$)$

Your Answer

Record the purchase of the real estate. $($Credit account tities are automatically indented when the amount is entered. Do not indent

manually. If no entry is required, select $"$No Entry" for the account titles and enter $0$ for the amounts. List all debit entries before credit

entries$)$

Account Titles

Debit

Credit

Land

$409,500$

Bullding

$643,500$

Land Improvements

$117,000$

Cash

Mortgape Payable

$926,000$

$($c$)$

Calculate the annual depreciation expense for the building and land improvements assuming Pharoah Farms uses straight$-$line

depreciation. $($Round answers to $0$ decimal places, es$\mathrm{.}8,5,275.)$