Problem 8-1A (Algo) Plant asset costs; depreciation methods LO C1, P1

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Timberly Construction makes a lump-sum purchase of several assets on January 1 at a total cash price of $820,000. The estimated market values of the purchased assets are building, $411,750; land, $265,350; land improvements, $27,450; and four vehicles, $210,450.

Problem 8-1A (Algo) Part 1-3

Required:

1-a. Allocate the lump-sum purchase price to the separate assets purchased.

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

2. Compute the first-year depreciation expense on the building using the straight-line method, assuming a 15-year life and a $31,000 salvage value.

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

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