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 $820,000. The estimated market values of the purchased assets are building, $439,450; land, $261,800; land improvements, $37,400; and four vehicles, $196,350.

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 $30,000 salvage value. 3. Compute the first-year depreciation expense on the land improvements assuming a five-year life and double-declining-balance depreciation.

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

Allocation of total cost	Estimated Market Value	Percent of Total			Total cost of Acquisition	Apportioned Cost
Building			%
Land			%
Land improvements			%
Vehicles			%
Total			%

Record the costs of lump-sum purchase.

Note: Enter debits before credits.

Date	General Journal	Debit	Credit
January 01

Compute the first-year depreciation expense on the building using the straight-line method, assuming a 15-year life and a $30,000 salvage value. (Round your answer to the nearest whole dollar.)

Depreciation expense on building

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

	Depreciation expense on land improvements