Required information

Skip to question

$[$The following information applies to the questions displayed below.$]$

Timberly Construction makes a lump$-$sum purchase of several assets on January $1$ at a total cash price of $$810,000.$ The estimated market values of the purchased assets are building, $$469,200$; land, $$276,000$; land improvements, $$64,400$; and four vehicles, $$110,400.$

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.