Problem 10-1A Plant asset costs; depreciation methods LO C1, P1

Timberly Construction negotiates a lump-sum purchase of several assets from a company that is going out of business. The purchase is completed on January 1, 2017, at a total cash price of $800,000 for a building, land, land improvements, and four vehicles. The estimated market values of the assets are building, $496,600; land, $267,400; land improvements, $47,750; and four vehicles, $143,250. The company's fiscal year ends on December 31.

Required:

1-a.Prepare table to allocate the lump-sum purchase price to the separate assets purchased.

1-b.Prepare the journal entry to record the purchase.

2.Compute the depreciation expense for year 2017 on the building using the straight-line method, assuming a 15-year life and a $32,000 salvage value.

3.Compute the depreciation expense for year 2017 on the land improvements assuming a five-year life and double-declining-balance depreciation.