Question
Question 1(10 points) Bowie Company made a lump sum purchase of land, building, and equipment. The following were the appraised values of each element:
Bowie Company made a lump sum purchase of land, building, and equipment. The following were the appraised values of each element:
PP&E Element
Amount
Land
$15,000
Building
25,000
Equipment
50,000
Bowie paid $65,000 cash for the lump sum purchase. What value should be allocated to the building? (Enter only whole dollar values.)
Your Answer:
Question 1 options:
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Question 2 (10 points)
Cambridge Company purchased a truck on January 1, 2018. Cambridge paid $18,000 for the truck. The truck is expected to have a $3,000 residual value and a 5-year life. Cambridge has a December 31 fiscal year end. Using the double-declining balance method, how much is the 2019 depreciation expense? (Enter only whole dollar values.) Hint: what is the year 2 depreciation amount?
Your Answer:
Question 2 options:
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Question 3 (10 points)
Cambridge Company purchased a truck on January 1, 2018. Cambridge paid $17,000 for the truck. The truck is expected to have a $2,000 residual value and a 5-year life. Cambridge has a December 31 fiscal year end. Using the straight-line method, how much is the 2019 depreciation expense? (Enter only whole dollar values.)
Your Answer:
Question 3 options:
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Question 4 (10 points)
Somerset Company acquired a piece of equipment with a list price of $200,000 for $158,000. Freight to Somerset's location was $7,000. Installation and testing costs were $9,500. An old piece of equipment was scrapped as a result of this new purchase. The old piece of equipment had an undepreciated value (net book value) of $8,000. The new piece of equipment is expected to have a 10 year life and a salvage value of $15,000. What is the total value assigned to the new piece of equipment?
Your Answer:
Question 4 options:
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Question 5 (10 points)
February 1, 2018, Salisbury Company purchased land for the future factory location at a cost of $112,000. The dilapidated building that was on the property was demolished so that construction could begin on the new factory building. The new factory was completed on November 1, 2018. Costs incurred during this period were:
Item
Amount
Demolition dilapidated building
$2,400
Architect Fees
$11,250
Legal Fees - for title search
$1,550
Interest During Active Construction Period
$5,025
Real estate transfer tax
$1,350
Construction Costs
$605,000
Using this information, how much should be recorded as the cost of the land?
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